USSavings Bonds Are Sold at a Discount

question 110

Multiple Choice

U.S.Savings Bonds are sold at a discount.The face value of the bond represents its value on its future maturity date.Therefore,

• A) the current price of a $50 face value bond that matures in 10 years will be greater than the current price of a $50 face value bond that matures in 5 years.
• B) the current price of a $50 face value bond that matures in 10 years will be less than the current price of a $50 face value bond that matures in 5 years.
• C) the current prices of all $50 face value bonds will be the same, regardless of their maturity dates because they will all be worth $50 in the future.
• D) the current price of a $50 face value bond will be higher if interest rates increase.

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