Suppose That a Bond Is Issued at Its Par Value

question 26

Multiple Choice

Suppose that a bond is issued at its par value or face value and 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:

Reaction

A process in which chemical substances interact, leading to the rearrangement of their atomic connectivity and the formation of different substances.

Compound

A substance formed from two or more elements that are chemically combined in fixed proportions.

Common Name

A non-scientific or traditional name given to a substance or organism, often simpler and more widely used than its official name.

Organic Product

A compound predominantly composed of carbon and hydrogen atoms, typically resulting from the chemical reaction of organic substances.