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If the Current Market Price of a Bond Is Less

question 34

Multiple Choice

If the current market price of a bond is less than the present value of the income stream the bond will produce,the price will ________ due to excess ________ of/for the bond.


Definitions:

Annuity

A financial instrument designed to offer a steady flow of income to someone, mainly used for retirement purposes.

Quarterly

Pertaining to something that occurs every three months or four times a year.

Life Annuity

An insurance product that guarantees regular payments to the annuitant for life, in exchange for an initial investment.

Term Annuity

An insurance product that pays out income over a fixed period or term, not necessarily for life.

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