Consider a Government of Canada Bond with a Face Value

question 24

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

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Definitions:

Public Opinion

The aggregate of individual attitudes or beliefs held by the adult population concerning various issues or topics of interest.

Royal Officials

Individuals appointed by a monarch or royal authority to perform specific duties and administer governance in various capacities within a kingdom or empire.

Enlightenment

An intellectual and philosophical movement in Europe during the 17th and 18th centuries emphasizing reason, individualism, and skepticism towards traditional doctrines.