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the big cheese shred it grating agency has issued $1000 face bonds with an 8% coupon....

the big cheese shred it grating agency has issued $1000 face bonds with an 8% coupon. the bonds mature in 8 years and call for semi annual payments they currently have a yield to maturity of 6.5% what will happen to the price of the bond if the market interest rate suddenly decreases to 5%?

bond price will INCREASE/DECREASE but still trade at a PREMIUM/DISCOUNT
OR bond price remains the same

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Expert Solution

bond price will INCREASE but still trade at a PREMIUM

Please dont forget to upvote

jeff jeffy answered 1 year ago
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