A Bond with a $100 Annual Interest Payment and $1,000

question 61

True/False

A bond with a $100 annual interest payment and $1,000 face value with five years to maturity (not expected to default) would sell for a premium if interest rates were below 9% and would sell for a discount if interest rates were greater than 11%. 

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Definitions:

Electrical Charge

A physical property of matter that causes it to experience a force when placed in an electromagnetic field, with two types: positive and negative.

CO₂

Carbon dioxide, a colorless, odorless gas produced by burning carbon and organic compounds and by respiration.

Midline

An imaginary line that divides the body into equal right and left halves.

Tasteless

Lacking flavor or not having any taste, often used to describe food or substances without a discernible taste.