All Else Held Constant, the Present Value of a Bond

question 31

Multiple Choice

All else held constant, the present value of a bond increases when the:

• A)coupon rate decreases.
• B)yield to maturity decreases.
• C)current yield increases.
• D)time to maturity of a premium bond decreases.
• E)time to maturity of a zero coupon bond increases.

---

Definitions:

Real Balances Effect

The impact of price level changes on the purchasing power of consumers' money holdings, influencing their spending and saving behavior.

Jean Baptiste Say

A French economist known for Say's Law, which suggests that supply creates its own demand in the economy.

Supply

The total amount of a specific good or service that is available to consumers in the market at a given time and price.

Demand

Pertains to the desire and capability of consumers to buy products and services at various price points.