if interest rates in the overall economy decrease to 4 percent, which one of the following is most likely to be the approximate market value of a $1,000 corporate bond with a fixed interest rate of 6 percent?

If interest rates in the overall company decrease to 4%, the approximate market value of a $1,000 corporate bond with a fixed interest rate of 6% is $1,500.

What is interest rate?

It is the amount a lender charges a borrower and is a percentage of the principal - the amount loaned.

What it the connection between interest rate and bonds?

Bond prices have an inverse relationship with interest rates. It means that if the interest rate go up, then the bond prices will go down and if the interest rate go down, then the bond prices will go up.

How to calculate the market value?
Bond price

= Face value * (Coupon rate / Interest rate)

= 1000 * (6% / 4%)

= 1000 * 1.5

= 1,500

Therefore, the market value of a corporate bond is $1,500.

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