The Principal Value of a Bond Generally Is Written on the Outside

question 43

Multiple Choice

The principal value of a bond generally is written on the outside cover of the debt contract, so it is sometimes called the:

• A)maturity value.
• B)premium value.
• C)yield value.
• D)face value.
• E)discounted value.

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Definitions:

Annual Return

The percentage change in an investment's value over a one-year period, including any dividends or interest payments.

Nominal Rate of Return

The rate of return on an investment without adjusting for inflation.

Real Future Value

The measure of the future value of an investment or stream of cash flows, adjusted for inflation, to reflect the actual purchasing power of that future amount.

Inflation

The rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.