If the Required Rate of Return on a Bond (Rd)

question 14

True/False

If the required rate of return on a bond (rd) is greater than its coupon interest rate and will remain above that rate, then the market value of the bond will always be below its par value until the bond matures, at which time its market value will equal its par value. (Accrued interest between interest payment dates should not be considered when answering this question.)

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Definitions:

Divide

To perform division, which is one of the four basic operations in mathematics, separating something into equal parts or groups.

Monetary Products

Financial products and instruments that are used for saving, investing, or making transactions, such as currencies, stocks, bonds, and savings accounts.

Round Off

The process of adjusting numbers to their nearest value based on a specific unit of measure, simplifying calculations or representations.

Multiply

To increase or combine quantities by a specific factor or number, resulting in a total that is the product of the factors.