When the market rate of interest is equal to the states rate of interest on the bond, what will the bond require.

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When the market price of curiosity is the same as the state’s price of curiosity on the bond, the bond would require a coupon fee equal to the state’s price. It’s because bonds are priced inversely based mostly on their rates of interest; when a bond’s rate of interest matches that of {the marketplace}, it’s stated to be at par worth. As such, buyers will anticipate a return equal to what they may get by investing in different securities with comparable threat profiles. On this case, that might be a coupon price equal to the prevailing market price for bonds with comparable threat profiles.

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