The Market Value (Present Value) of a Bond Is a Function

question 48

Multiple Choice

The market value (present value) of a bond is a function of all of the following except the

• A) dollar amounts to be received.
• B) length of time until the amounts are received.
• C) market rate of interest.
• D) length of time until the bond is sold.

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Definitions:

Spot Rates

Spot Rates refer to the current interest rates available for immediate transactions in the bond market, influencing the pricing of the financial securities.

Interest Rate Parity

A financial theory stating that the difference in interest rates between two countries is equal to the difference between the forward and spot exchange rates of their currencies.

Nominal Risk-Free

The rate of return on an investment with no risk of financial loss, not adjusted for inflation.

Export Development Canada

A Canadian government agency that provides financing, insurance, and bonding services to Canadian exporters and investors.