Which of the Following Statements Is TRUE

question 11

Multiple Choice

Which of the following statements is TRUE?

• A) The quoted price of a bond is the actual price an investor pays for the bond whenever the bond is sold at a date other than the date of a coupon payment.
• B) The quoted price of a bond is the actual price an investor pays for the bond when the bond is sold on the date of a coupon payment.
• C) A bond purchaser must pay the bond seller the cash price plus the accrued interest on the bond.
• D) The cash price plus the accrued interest on the bond is the quoted price of the bond.

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Definitions:

Annual Simple Interest

Interest calculated once a year on the principal sum, without compounding.

Earned

Received as a result of work or effort.

Simple Interest Rate

The rate at which simple interest is calculated, usually on an annual basis.

Borrowed

Funds taken as a loan from a lender with the agreement to pay back with interest.