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:

Lowest Terms

The expression of a fraction in its simplest form, where the numerator and denominator are as small as possible.

Ratio

A mathematical way to compare two quantities, indicating how many times one value contains or is contained within the other.

Lowest Terms

The simplest form of a fraction, where the numerator and denominator are reduced to their smallest possible values.

Ratio

A mathematical expression that compares two numbers by division, indicating how much of one value there is compared to another.