Consider a Hydro Quebec Bond with a Face Value of $1000,and

question 106

Multiple Choice

Consider a Hydro Quebec bond with a face value of $1000,and a present value of $1175.If this bond is offered for sale at $1025,then

• A)excess supply of this bond will drive the price down until it reaches its face value.
• B)individuals will purchase the bond at the offer price which will drive down the price further.
• C)excess demand for this bond will drive the price up until it reaches its equilibrium market price of $1175.
• D)the equilibrium market price of this bond has been achieved.
• E)Hydro Quebec will be forced to change the face value of the bond.

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Definitions:

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