When an Old Bond's Market Value Is Above Its Par

question 57

Multiple Choice

When an old bond's market value is above its par value,the bond is selling at a ________.This occurs because the old bond's coupon rate is ________ the coupon rates of new bonds with similar risk.

• A) premium; below
• B) premium; above
• C) discount; below
• D) discount; above

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Definitions:

Ownership Rights

Legal rights that grant individuals or entities the authority to possess, use, and dispose of property or resources.

Defense Mechanism

Psychological strategies employed unconsciously to protect oneself from anxiety arising from unacceptable thoughts or feelings.

Fancied Defect

Perceived flaws or imperfections that might not necessarily exist or be as severe as believed by an individual.

Compensation

Payment or reward given for services or to make up for someone's loss, damage, or injury.