If the Market Price of a Bond Exceeds Its Face

question 52

Multiple Choice

If the market price of a bond exceeds its face amount:

• A)the coupon rate is less than the market interest rate.
• B)the coupon rate is more than the market interest rate.
• C)the company's ROI and working capital have been increasing over time.
• D)the maturity rate has been declining.

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Definitions:

Counterparty

Second borrower in currency swap. Counterparty borrows funds in currency desired by principal.

Currency Swap

A Currency Swap is a financial derivative that involves the exchange of principal and interest payments in one currency for those in another, commonly used by companies to manage foreign exchange risk.

Exchange Rate Risk

The potential for loss due to fluctuations in the foreign exchange rates affecting investments or transactions.

Economic Conditions

The state and dynamics of the economy at a given time, reflected in indicators like growth rates, unemployment, inflation, and consumer confidence.