When Will Bonds Sell Without a Premium or Discount

question 7

Multiple Choice

When will bonds sell without a premium or discount?

• A)When the coupon rate equals the par value.
• B)When the coupon rate is below the market rate.
• C)When the coupon rate is above the market rate.
• D)When the coupon rate is equal to the market rate.

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Definitions:

Tax

A tax is a compulsory financial charge or some other type of levy imposed upon a taxpayer by a governmental organization.

Consumer Surplus

The discrepancy between the amount consumers are prepared to spend on a product or service and the actual price they pay.

Consumer Surplus

The gulf between the aggregate amount consumers are willing to allocate for a good or service and what they actually end up paying.

Producer Surplus

The variance between the minimum amount producers are prepared to take for a product and the actual payment they get.