A Bond Sells at a Discount When

question 27

Multiple Choice

A bond sells at a discount when

• A) its price equals its face value.
• B) its price exceeds its face value.
• C) an investor does not receive periodic interest payments from a coupon bond.
• D) its price is lower than its face value.
• E) the broker charges a low commission on the sale.

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Definitions:

Decrease Rate

A term that may refer to the rate at which a value is reducing over a period of time.

Compounded Quarterly

The calculation of interest on both the original principal and previously earned interest every three months.

Lump Sum Payment

A single payment made at one time, in contrast to smaller, periodic payments.

Lump Sum Payment

A one-time payment made specifically rather than multiple smaller payments over time.