Which of the Following Statements Is TRUE About a Bond

question 107

Multiple Choice

Which of the following statements is TRUE about a bond that is issued at a premium?

• A) It will be sold above par.
• B) Its interest rate lower than the prevailing market rate.
• C) It will repay principal at more than the face value.
• D) It will be sold at par.

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Definitions:

Potential Reward

The expected gain or benefit that may be obtained from an investment or action.

Risky Asset

An asset that carries a higher level of financial risk when compared to safer investments, often with the potential for higher returns.

Semi-Strong Efficiency

A form of market efficiency that asserts all public information is already reflected in stock prices, making it impossible to achieve consistently higher returns.

Historical Information

Past data or records that provide context or insight into an event, individual, or institution's background.