2 questions on long-term liabilities interest, carried, however, because, why

manchester88

1. If market rate changes and bonds are carried at amortized cost, why does the book value of the bonds after the first year (or any other point in time) not change? i thought if market rates go up, bonds go down and vice versa.

2. if market rate of interest increases after the bond is issued, what happens to the debt / equity ratio? based on my thinking, debt portion of D/E goes down because as the market interest rate moves up, bond value goes down. however, i don't undestand why equity would go UP? i didn't realize market interest changes would change the equity portion?

thanks for your help guys!