What Causes Bonds to Sell for a Premium

question 14

Multiple Choice

What causes bonds to sell for a premium?

• A) Investment-quality ratings
• B) Long periods until maturity
• C) Coupon rates that exceed market rates
• D) Speculative-grade ratings

Explain the terms of trade and how they reflect comparative advantages between nations.

Analyze how trade affects national standards of living and employment.

Understand the basic concepts of international trade, including importing and exporting.

Analyze the impact of world prices on a country's trade behavior (exporting and importing).

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Definitions:

Unrealized Loss

A financial situation where an investment holds a lower market value than its purchasing price, yet the investor has not actually sold it to incur a realized loss.

Amortized Cost

The initial investment cost adjusted for amortization or depreciation over the period of the investment.

Effective Interest Rate

The real cost of borrowing after adjusting for compounding interest and all fees. It provides a more accurate representation of the actual financial charge associated with a loan.

Trading Security

A financial instrument that is bought and sold for the purpose of generating profits on short-term fluctuations in price.