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

question 61

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

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Definitions:

Cost Justification

The process of demonstrating that a proposed expenditure or investment is worthwhile based on the anticipated benefits exceeding the costs.

Quantity Discounts

Discounts offered to buyers for purchasing large volumes of goods, encouraging bulk purchasing.

Robinson-Patman Act

A U.S. antitrust law aimed at preventing discrimination in prices between different purchasers of commodities of like grade and quality, promoting fair competition.

Wholesaler Special

A promotion or discount offered exclusively to wholesale customers typically involving bulk purchases.