Decide you want to travel during spring break

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Reference no: EM131076390

Suppose you buy a bond on March 3, 2016 for $1,000 that pays you interest at 8% annually ($80 per year). The bond you purchased matures on March 5, 2025. Next year, on March 3, 2017, you decide you want to travel during Spring Break and choose to sell the bond you purchased last March to pay for your trip. You’re pleasantly surprised that you were able to sell your bond in March 2017 for $1,200. The fact that you were able to sell your bond for $200 more than you paid for it means interest rates must have increased from March 2016 to March 2017. Indicate whether the last statement is TRUE or FALSE; and then provide support for your answer.

Reference no: EM131076390

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