A Bond That Pays No Annual Interest (Or Coupons) and Has

question 140

Multiple Choice

A bond that pays no annual interest (or coupons) and has a face value at maturity will fetch a price today that is equal to the

• A) future value of its face value.
• B) number of years in the life of the bond times its face value.
• C) present value of the number of years in the life of the bond times its face value.
• D) present value of its face value.

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Definitions:

Equalize Quantity

Bringing the amount of supply in line with the amount of demand.

Equilibrium Price

The price at which the quantity of a good demanded by consumers equals the quantity supplied by producers, resulting in market balance.

Bushels Demanded

The quantity of a commodity, such as wheat or corn, measured in bushels, that buyers are willing to purchase at a given price.

Bushels Supplied

Bushels Supplied refers to the quantity of agricultural products, measured in bushels, that producers are willing to sell at a given price.