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The Face Value of a Bond Is Also Its Market

question 144

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The face value of a bond is also its market value.


Definitions:

Face Value

The nominal or dollar value stated on a security or financial instrument, such as a bond or stock, representing its worth at issuance or par value.

Interest Rate Risk

The risk of investment value changes due to variations in the level of interest rates.

Zero-Coupon

A bond that does not pay periodic interest and is issued at a substantial discount from its face value.

Coupon

The interest rate stated on a bond when issued, which represents the annual interest payment made to the bondholder.

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