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

Question

Business

Mia Fitzpatrick

21 February, 04:45

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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Answers (1)

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Marina Cummings · Answer 1

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.