Describe and give an example of what happens to the value of a bond when interest rates change. Discuss the relationship between interest rates and bond values (direct or inverse), the impact of the coupon rate, and the maturity date. What happens to the value of a 10-year, $10,000, 5% bond if the next day the interest rate on new bonds goes up to 8%?

Answer rating: 100% (QA)

Answer I There is always an inverse relationship between the interest rates and bond prices II ... View the full answer