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16 December, 15:12

If interest rates in the overall economy decrease, what will happen to the market value of a corporate bond with a fixed interest rate?

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  1. 16 December, 15:41
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    The value of the bond will increase in the market.

    Explanation:

    In a situation in the economy where there is a fall in the rate of interest, in that case, the value of the bond which has a fixed rate of interest will increase.

    Since the rate of interest of that corporate bond is fixed but there is a fall in the rate of interest in the economy, the value of the bond whose rate of interest can not fall, will increase.
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