What Happens to the Price of a Bond with a $100

question 24

Multiple Choice

What happens to the price of a bond with a $100 face value and an infinite maturity date when interest rates rise from 5 percent to 10 percent and the coupon paid on the bond is $20?

• A)The price falls by $100.
• B)The price rises by $200.
• C)The price rises by $100.
• D)The price falls by $1.
• E)The price falls by $200.

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