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:

Indirect Costs

Expenses not directly tied to a specific project, product, or activity, often including overhead costs like administration and utilities.

Issuance Costs

Expenses associated with the distribution of new securities, including underwriting, legal, and registration fees.

Business Combination

A transaction or event where two or more businesses merge to form a single reporting entity, typically involving the exchange of equity interests or control over those businesses.

Business Combination

A transaction or event where an acquirer obtains control of one or more businesses.