Finra Exam SIE Topic 2 Question 10 Discussion

Actual exam question for Finra's SIE exam

Question #: 10
Topic #: 2

[All SIE Questions]

In a rising interest rate environment, which of the following statements is true regarding the price of fixed-rate corporate bonds?

ATheir price will remain constant.

BTheir price will revert to par value.

CTheir price will appreciate in value.

DTheir price will depreciate in value.

Show Suggested Answer

Suggested Answer: D

When interest rates rise, the price of fixed-rate corporate bonds falls because the bond's coupon payments become less attractive compared to new bonds issued at higher rates.

D is correct as bond prices move inversely to interest rates.

A is incorrect because bond prices fluctuate with interest rate changes.

B is incorrect because bond prices revert to par only at maturity.

C is incorrect because prices do not appreciate when rates rise.

by My at May 05, 2025, 08:52 AM

Limited Time Offer

25%

14 days ago

I think option D is the correct answer. As interest rates rise, the price of fixed-rate corporate bonds will depreciate in value.

upvoted 0 times

Terina

2 days ago

That makes sense. It's important to understand how interest rates impact bond prices.

upvoted 0 times

...

Lachelle

3 days ago

I agree with you, option D is correct. The price of fixed-rate corporate bonds will indeed depreciate as interest rates rise.

upvoted 0 times

...