Multiple Choice
Assume an investor purchased a fixed-coupon bond at a time when the bond's yield to maturity was 6.9%. Further assume the investor sold the bond prior to maturity and realized a total return of 7.1%. Which of these most likely occurred while the investor owned the bond?
A) The bond's current yield increased above the bond's coupon rate.
B) The inflation rate increased.
C) New bonds with similar characteristics have coupon rates of 6.5%.
D) Market interest rates increased.
Correct Answer:
Verified
Correct Answer:
Verified
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