The Face Value of a Bond Is

question 29

Multiple Choice

The face value of a bond is:

• A) the value of the bond at maturity plus the price of the bond at purchase.
• B) the value of the bond at maturity minus the price of the bond at purchase.
• C) the price of the bond at purchase.
• D) the value of the bond at maturity; the amount due at repayment.
• E) the price of the bond at purchase minus the face value of the bond.

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Definitions:

Internal Rate

Often referring to the Internal Rate of Return (IRR), it's the discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.

Cash Flows

The total amount of money being transferred into and out of a business, especially as affecting liquidity.

Outlay

The amount of money spent on a particular expense or investment.

Payback Period

The time it takes for an investment to generate an amount of income or cash equal to the cost of the investment.