Question

Other things the same, if the price of a bond falls today, then:

I. the expected rate of capital gains increases

II. the coupon rate increases

III. the yield to maturity on the bond increases

Answers:

A. II Only

B. I, II, and III

C. I and III only

D. I only

Answer 1

1):-C is right option,I and III only

Other things the same, if the price of a bond falls today, then

the expected rate of capital gains increases.

the yield to maturity on the bond increases.

Because coupon rate are always fix.

Bonds are debt issued by companies, countries, and municipalities; a bond is an IOU or a loan
As a bond buyer I give a $1,000 loan to the company issuing the bond (I am a creditor)
The bond issuer, Company X, agrees to pay me a specified rate of return for a specified period of time (coupon rate).
$1,000 bond with a coupon of 7% will pay $70 / year (Do calculations on handout)
At the end of that time (maturity date), the bond issuer pays me back my $1,000