If a Bond's Stated Interest Rate Is Lower Than the Market

question 133

Multiple Choice

If a bond's stated interest rate is lower than the market rate,which of the following is TRUE?

• A) The bond will be issued at a premium.
• B) The bond will be issued at par.
• C) The bond will be issued at a discount.
• D) The bond will be issued for an amount higher than the maturity value.

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Definitions:

Confining Stress

The stress applied equally in all directions to a rock or soil, limiting its deformation.

Compression

This is a force or stress that reduces volume or shortens an object or material by pressing it together.

Tension

a force that stretches something, making it longer or tighter.

Shear

A strain in materials characterized by slippage along a plane or planes parallel to the imposed stress.