Consider a Government of Canada Bond with a Face Value

question 60

Multiple Choice

Consider a Government of Canada bond with a face value of $1000,and a present value of $925.If this bond is offered for sale at $960,then

• A)the excess demand for the bond at $960 will drive the price up to the face value of the bond.
• B)individuals will purchase the bond at the offer price which will drive the market rate of interest up.
• C)individuals will purchase the bond at the offer price which will drive the market rate of interest down.
• D)the equilibrium market price of this bond has been achieved.
• E)the lack of demand for this bond will drive the price down until it reaches its equilibrium market price of $925.

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