Which One of the Following Will Occur If a Bond's

question 10

Multiple Choice

Which one of the following will occur if a bond's discount rate is lowered?

• A)market price will increase
• B)coupon payment amount will decrease
• C)current yield will increase
• D)call premium will increase
• E)coupon rate will decrease

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Definitions:

External Effects

In economics, externalities or external effects occur when the actions of individuals or firms have positive or negative impacts on third parties not directly involved in the transaction.

Demand

Refers to the quantity of a good or service that consumers are willing and able to purchase at different prices at a given time.

Supply

The total amount of a specific good or service that is available to consumers at a given price level and over a specific period.

Positive Externalities

Benefits received by third parties who are not directly involved in a transaction or activity, leading to potentially under-produced goods or services in a free market.