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- 2011-7-11
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- 2013-9-26
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Treasuries interest rate declined to 4.2%, thus the price of the bond went up.
Example 10% bond with face value of $909. If interest rate goes down to 5% the face value must be $952. Thus increase of $50 in face value due to lower interest rate
By the why, answer B is typed incorrectly it should read: below par at issuance, but above par three months later. |
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