If a bond is selling for more than its par value and the market interest rate...

If a bond is selling for more than its par value and the market interest rate remains unchanged during the life of the bond, then as the maturity date approaches, how will the price (value) of the bond change?

	a.	Increase
	b.	Cannot determine
	c.	Remain unchanged
	d.	Decrease

Solutions

Expert Solution

Answer: Decrease

jeff jeffy answered 2 years ago

Next > < Previous

Related Solutions

What is the market value of the following bond? Coupon 9% Maturity date 2028 Interest paid semiannually Par Value $1000 Market interest rate 8%

What is the market value of the following bond?Coupon 9%Maturity date 2028Interest paid semiannuallyPar Value $1000Market interest rate 8%

What is the market value of the following bond? Coupon 8% Maturity date 2038 Interest paid semiannually Par Value $1000 Market interest rate 10%

What is the market value of the following bond?Coupon 8%Maturity date 2038Interest paid semiannuallyPar Value $1000Market interest rate 10%

Calculate the value of a $1,000-par-value bond paying quarterly interest at an annual coupon interest rate...

Calculate the value of a $1,000-par-value bond paying quarterly interest at an annual coupon interest rate of 8% and having 15 years until maturity if the required return on similar-risk bonds is currently a 16% annual rate paid quarterly.

You are considering a 30-year, $1,000 par value bond. Its coupon rate is 8%, and interest...

You are considering a 30-year, $1,000 par value bond. Its coupon rate is 8%, and interest is paid semiannually. If you require an "effective" annual interest rate (not a nominal rate) of 9.4835%, how much should you be willing to pay for the bond? Do not round intermediate calculations. Round your answer to the nearest cent.

You are considering a 15-year, $1,000 par value bond. Its coupon rate is 8%, and interest...

You are considering a 15-year, $1,000 par value bond. Its coupon rate is 8%, and interest is paid semiannually. If you require an "effective" annual interest rate (not a nominal rate) of 7.9945%, how much should you be willing to pay for the bond? Do not round intermediate calculations. Round your answer to the nearest cent. $

You are considering a 10-year, $1,000 par value bond. Its coupon rate is 8%, and interest...

You are considering a 10-year, $1,000 par value bond. Its coupon rate is 8%, and interest is paid semiannually. The data has been collected in the Microsoft Excel Online file below. If you require an "effective" annual interest rate (not a nominal rate) of 10.16%, how much should you be willing to pay for the bond? Do not round intermediate steps. Round your answer to the nearest cent.

You are considering a 25-year, $1,000 par value bond. Its coupon rate is 9%, and interest...

You are considering a 25-year, $1,000 par value bond. Its coupon rate is 9%, and interest is paid semiannually. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below. If you require an "effective" annual interest rate (not a nominal rate) of 9.3%, how much should you be willing to pay for the bond? Do not round intermediate steps. Round your answer to the nearest...

You are considering a 25-year, $1,000 par value bond. Its coupon rate is 10%, and interest...

You are considering a 25-year, $1,000 par value bond. Its coupon rate is 10%, and interest is paid semiannually. If you require an "effective" annual interest rate (not a nominal rate) of 11.58%, how much should you be willing to pay for the bond? Do not round intermediate steps. Round your answer to the nearest cent.

You are considering a 10-year, $1,000 par value bond. Its coupon rate is 10%, and interest...

You are considering a 10-year, $1,000 par value bond. Its coupon rate is 10%, and interest is paid semiannually. If you require an "effective" annual interest rate (not a nominal rate) of 11.2510%, how much should you be willing to pay for the bond? Do not round intermediate calculations. Round your answer to the nearest cent.

You are considering a 25-year, $1,000 par value bond. Its coupon rate is 10%, and interest...

You are considering a 25-year, $1,000 par value bond. Its coupon rate is 10%, and interest is paid semiannually. If you require an "effective" annual interest rate (not a nominal rate) of 9.3275%, how much should you be willing to pay for the bond? Do not round intermediate calculations. Round your answer to the nearest cent.

Subjects