Which One of the Following Is Correct When Computing the Price

question 60

Multiple Choice

Which one of the following is correct when computing the price of a debt security when using a discount yield?

• A)The price will exceed the face value.
• B)An increase in the discount yield will increase the current price.
• C)The current price will decrease as the days to maturity decrease.
• D)The computation will be based on a 360-day year.
• E)The computation will consider leap years.

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Definitions:

Price Elasticity of Demand

An indicator of the responsiveness of the quantity demanded of a product to changes in its price.

Movie Tickets

A form of voucher or certificate that entitles the holder to admission to a film screening.

Elastic

Describes a situation where a change in one variable, such as price, leads to a significant change in another variable, such as demand.

Price Elasticity of Demand

An indicator of consumer sensitivity to price fluctuations, represented by the degree to which the demand for a product varies in response to alterations in its price.