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1 June, 00:16

If interest rates are declining, which of the following would be expected? (A) Discount bonds will appreciate more than premium bonds. (B) Premium bonds will appreciate more than discount bonds. (C) All bonds will depreciate equally. (D) All bonds will appreciate equally.

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  1. 1 June, 01:09
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    option A

    Explanation:

    The correct answer is option A.

    When interest rates are declining, prices of the bond rise, but in this case the discount bonds will appreciate more than the premium bonds.

    When interest rates fall it becomes very easier to borrow money and causing many companies to issue new bonds so that they can invest in new ventures.

    A premium bond is a bond trading above its face value.

    A bond issued at a discount has its market price below the face value.
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Home » Business » If interest rates are declining, which of the following would be expected? (A) Discount bonds will appreciate more than premium bonds. (B) Premium bonds will appreciate more than discount bonds. (C) All bonds will depreciate equally.
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