What is interest rate risk? How does a rise in interest rates affect a bond’s price?
Answer to relevant QuestionsHow is interest rate risk affected by a bond’s maturity? How can investors use expectations of interest rate movements to their advantage? How is the value of a bond determined? What information is needed to perform the calculation? What are municipal bonds? Why are they issued? Are all municipal bonds free from default risk? What characteristic makes municipal bonds especially attractive to high-income investors? Katie paid $ 9,400 for a Ginnie Mae bond with a par value of $ 10,000 and a coupon rate of 6.5%. Two years later, after having received the annual interest payments on the bond, Katie sold the bond for $ 9,700. What are her ...The Sampsons learn that many corporate bonds have recently been downgraded due to questionable financial statements. However, the Sampsons are not concerned, since the corporate bond they are considering is highly rated. ...
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