Assume an Investor Purchased a Fixed-Coupon Bond at a Time

question 98

Multiple Choice

Assume an investor purchased a fixed-coupon bond at a time when the bond's yield to maturity was 6.9%. Further assume the investor sold the bond prior to maturity and realized a total return of 7.1%. Which of these most likely occurred while the investor owned the bond?

• A) The bond's current yield increased above the bond's coupon rate.
• B) The inflation rate increased.
• C) New bonds with similar characteristics have coupon rates of 6.5%.
• D)Market interest rates increased.

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