Assume a Bond Is Currently Selling at Par Value

question 95

Multiple Choice

Assume a bond is currently selling at par value.What will happen in the future if the yield on the bond is lower than the coupon rate?

• A) The price of the bond will increase.
• B) The coupon rate of the bond will increase.
• C) The par value of the bond will decrease.
• D) The coupon payments will be adjusted to the new discount rate.

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Definitions:

Cost Of Goods Sold

The direct costs attributable to the production of the goods sold in a company, including material and labor costs.

Ending Finished Goods Inventory

The value of all the finished goods available for sale at the end of an accounting period.