GK
ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Which of the following will cause an increase in bond values?
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Decrease in Coupon Rate
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Increase in Redemption Period
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Increase in Redemption Amount
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Decrease in Redemption Amount
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Explanation:
Detailed explanation-1: -The value of a bond increases if it’s paying more than the market. This only happens when interest rates drop.
Detailed explanation-2: -Investors like liquidity: the more liquid the bond, the higher the demand. If bonds become less risky relative to alternative investments, demand for bonds shifts right.
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