Suppose That a Bond Is Issued at Its Par Value

question 51

Multiple Choice

Suppose that a bond is issued at its par value or face value. If market interest rates rise after the issue, the price of the bond will likely:

• A) rise significantly above its par value.
• B) rise slightly above its par value.
• C) remain equal to its par value.
• D) fall below its par value.

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Definitions:

Comparative Advantage

A principle that states a country should produce and export goods for which it has a lower opportunity cost compared to other countries.

Allocate Resources

The process of distributing available resources among various projects or business units.

Maximize Output

Involves strategies or actions by a firm to produce as much as possible, often while considering constraints like resources, technology, and market demand.

Comparative Advantage

The capability to produce a particular good or service more efficiently than other producers, allowing for trade benefits.