If a Bond Is Sold in the Secondary Market

question 50

Multiple Choice

If a bond is sold in the secondary market,

• A)the issuing firm is buying back its own bond
• B)the issuing firm does not obtain any part of the price
• C)the seller remits a portion of the price to the issuing firm
• D)the yield must be insufficient to justify sale on the primary market
• E)the seller is the issuing firm

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Definitions:

Long-Run

A period in which all factors of production and costs are variable, allowing companies the flexibility to make changes in production capacity and operations.

Few Substitutes

Refers to a market condition where there are not many alternative products or services available to consumers, which often leads to less competition and higher prices.

Inelastic Demand

A situation in which the demand for a product does not change much in response to price changes.

Close Substitutes

Products that serve similar functions or needs and can easily replace one another in the eyes of the consumer.