Assume that three years ago, you purchased a 10-year corporate bond that pays 6.5 percent....
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Assume that three years ago, you purchased a 10-year corporate bond that pays 6.5 percent. The purchase price was $1,000. Also, assume that today comparable bonds are paying 5.5 percent. a) What is the annual dollar amount of interest that you receive from your bond investment? (Omit the "$" sign in your response.) Amount of interest $ b) Assuming that comparable bonds are paying 5.5 percent, what is the approximate market price for which you could sell your bond? (Round your answer to 2 decimal places. Omit the "$" sign in your response.) Market price $ c-1) Did the bond increase or decrease in value?
multiple choice 1
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Increased in value.
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Decreased in value.
c-2) Why did the bond increase or decrease in value?
multiple choice 2
Because market rates increased.
Because market rates decreased
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