If the Coupon Rate Equals the Required Rate of Return

question 75

Multiple Choice

If the coupon rate equals the required rate of return, the price of the bond

• A)should be above its par value.
• B)should be below its par value.
• C)should be equal to its par value.
• D)is negligible.

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Definitions:

Water Vapor

The gaseous phase of water, present in the atmosphere, which plays a critical role in the Earth's weather and climate systems.

Condensation

The process by which a vapor becomes a liquid; the opposite of evaporation.

Liquid Water

The state of water that is neither solid (ice) nor gas (vapor), commonly found in rivers, lakes, and oceans.

More Energetic

Characterized by or possessing a high level of energy or vitality.