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6 October, 09:24

The Value of a Bond is tied to the Dividend rate.

True or false

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  1. 6 October, 09:53
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    Answer: False. The Value of a Bond is not related to the Dividend rate.

    Explanation:

    Bond rates are inversely related with the interest rates in the market and not dividend rates. Bonds yield interest for the investment and not dividends. Dividends are paid for shares. Dividend rates affects the share price and not Bond value in the market.

    The interest rates of the Bonds can be fixed rates or fluctuating rates. It depends on the type of the security issued. As the interest rates are fluctuating then the risk for the investors increase.
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