Reationship between bond price and interest rate

- A bondholder owns a bond with a 7% semi-annual coupon. Will that coupon rate change if interest rates rise or fall? What will happen to the value of the bond if interest rates rise?

For the vast majority of bonds, the coupon rate is fixed for the bond’s life. So changing interest rates will have no impact on the coupon rate. On the other hand, given that fixed coupon rate, a rise in interest rates will result in a decline in the value of the bond.


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