Which of the Following Statements Is TRUE If a Bond

question 29

Multiple Choice

Which of the following statements is TRUE if a bond is issued for an amount higher than face value?

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

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Definitions:

Market Price

The current price at which an asset or service is bought or sold in a marketplace.

Discounted Price

The reduced price of an item or security after applying a discount, often used in time value of money calculations.

Bond Ratings

A grade given to bonds that indicates their credit quality, with ratings provided by agencies like Moody's, S&P, and Fitch.

Quantitative Analysis

The process of using mathematical and statistical techniques to evaluate economic, financial, or business trends and decisions.