Explain,without Writing Any Equations,how the Interest Rate Paid by a Bond

question 96

Essay

Explain,without writing any equations,how the interest rate paid by a bond is set by the bond's price.

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Definitions:

Common Shares

Units of ownership interest in a corporation, giving holders voting rights and a share in the company’s profits via dividends.

Dividends Declared

Dividends declared are the portion of a company's earnings that the board of directors decides to distribute to shareholders.

Shareholders' Equity

Represents the residual interest in the assets of a corporation after deducting liabilities, essentially the net worth attributable to shareholders.

Liabilities

Financial obligations or debts that a company owes to external parties or creditors.