The Proceeds Received from a Bond Issue Will Be Greater

question 101

True/False

The proceeds received from a bond issue will be greater than the bond maturity value when the stated interest rate exceeds the market rate of interest.

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Definitions:

After Taxes

The net amount remaining following the deduction of all applicable taxes, often used to assess the true profitability of a business activity or investment after federal, state, and other taxes have been considered.

Beta Coefficient

A gauge for assessing the risk or fluctuation level of a security or portfolio in relation to the entire market.

Risk-Free Rate

The theoretical rate of return on an investment with zero risk, typically represented by government bonds.

Market Risk Premium

The surplus earnings expected by investors for possessing a market portfolio with risks as opposed to secure, riskless assets.