If a Bond Is Priced at Par Value,then

question 20

Multiple Choice

If a bond is priced at par value,then:

• A) it has a very low level of default risk.
• B) its coupon rate equals its yield to maturity.
• C) it must be a zero-coupon bond.
• D) the bond is quite close to maturity.

---

Definitions:

Maximizing Profit

The process by which a company determines the optimal level of production and pricing to achieve the highest possible profit.

Purely Competitive

Refers to a market structure characterized by a large number of buyers and sellers, where all firms offer identical products and there is free entry and exit.

Profit-maximizing Level

The output level at which a firm achieves the highest possible profit.

Short-run

In economics, a period wherein at least one input (like capital) is fixed, and firms can only adjust variable inputs (like labor).