As the Price of an Existing Bond Increases

question 39

Multiple Choice

As the price of an existing bond increases,

• A)The current yield decreases.
• B)The par value decreases.
• C)The coupon rate decreases.
• D)There is increased risk that the U.S.Treasury will default on the bond.

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Definitions:

Less Than

is a mathematical comparison operator indicating that one quantity is smaller than another.

Normally Distributed

Describes a statistical distribution where data points are symmetrical, with most of the observations clustering around the mean and fewer and fewer occurring as they move away from the center.

Shifting Values

Refers to altering the numerical or categorical data points in a dataset, leading to changes in analysis outcomes.

σ

The symbol for standard deviation, a measure of the amount of variation or dispersion of a set of values.