Which of the Following Statements Is False

question 57

Multiple Choice

Which of the following statements is false?

• A) When the prevailing market interest rate is lower than the coupon rate, the bond will be traded at a premium.
• B) When the prevailing market interest rate is higher than the coupon rate, the bond will be traded at a discount.
• C) The longer the time to maturity, the less sensitive the market price of the bond becomes to changes in prevailing market rates.
• D) The higher the coupon rate, the less sensitive the market price of the bond becomes to changes in prevailing market rates.

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Definitions:

Domestic Price

The price of goods or services within a country's own market, as opposed to international or export prices.

Imported Shoes

Footwear that is produced in one country and then brought into another country for sale, often reflecting differences in fashion, quality, or price.

Domestic Market

The supply and demand for goods and services within a single country.

Domestic Producer Surplus

The difference between what domestic producers are willing to accept for a good and the actual price they receive, measuring their economic benefit.