If Investors Are Willing to Pay More Than the Par

question 58

Multiple Choice

If investors are willing to pay more than the par value for a bond, you can be sure that

• A)the tax rate on the bond must be very low.
• B)the coupon rate on the bond must be higher than on other similar bonds.
• C)the coupon rate on the bond must be lower than on other similar bonds.
• D)the par value for the bond must be very low.

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Definitions:

Fluid Intelligence

The capacity to solve novel problems, reason abstractly, and adapt to new situations, without relying on pre-existing knowledge.

Accumulated Knowledge

The total information and skills that an individual has gathered over a period of time from experiences, education, and training.

Heritability

A measure of how much of the variation in a trait among a population can be attributed to genetic differences.

Genetic Variation

Differences in the DNA sequence among individuals, which contribute to the uniqueness of each person's physical and behavioral characteristics.