Which of the Following Statements Is TRUE If a Bond

question 197

Multiple Choice

Which of the following statements is TRUE if a bond is issued at an amount less than its face value?

• A) The bond's stated rate is lower than the prevailing market rate at the time of sale.
• B) The bond's stated rate is the same as the prevailing market rate at the time of sale.
• C) The bond's stated rate is higher than the prevailing market rate at the time of sale.
• D) The bond is not secured by specific assets of the issuer.

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Definitions:

Average Return

The mean amount of profit or loss generated by an investment over a specific period.

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, indicating how much the values in a data set differ from the mean.

Diversification

An investment strategy aimed at reducing risk by allocating investments among various financial instruments, industries, or other categories.

High Dividends

The distribution of a portion of a company's earnings, decided by the board of directors, to its shareholders, which is considered high relative to other companies or historical payouts.