Which of the Following Is a Correct Statement About Bond

question 1

Multiple Choice

Which of the following is a correct statement about bond prices,other things equal?

• A)a lower face value leads to a higher bond price
• B)a higher risk of default leads to a higher bond price
• C)a higher risk of default leads to a lower yield
• D)fewer coupon payments lead to a higher bond price
• E)a higher price leads to a lower yield

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Definitions:

Outside Funds

Capital sourced from external investors or institutions, outside of the company’s existing financial resources, used for expansion, operations, or investment.

Debt

Money that is owed or due to be paid to someone else, often resulting from loans or credit.

Equity

Equity represents the value of an owner's interest in a property or business, after deducting liabilities.

Compensating Balance

A minimum bank account balance that a borrower agrees to maintain with a lender as part of the terms of a loan.