What Happens to the Coupon Rate of a $1,000 Face

question 70

Multiple Choice

What happens to the coupon rate of a $1,000 face value bond that pays $80 annually in interest if market interest rates change from 9% to 10%?

• A) The coupon rate increases to 10%.
• B) The coupon rate remains at 9%.
• C) The coupon rate remains at 8%.
• D) The coupon rate decreases to 8%.

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