Because Bond Prices Are Sensitive to Changes in Interest Rates

question 144

Multiple Choice

Because bond prices are sensitive to changes in interest rates:

• A)bonds hardly ever sell in the secondary market at their face value.
• B)bond prices are constantly changing.
• C)interest rates in excess of the coupon rate cause the bond to sell at a discount, while interest rates below the coupon rate cause the bond to sell at a premium.
• D)All of the above

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Definitions:

Consuming Services

Consuming services refers to the use of services provided by businesses or individuals which are utilized and exhausted during the process, such as electricity, consulting, or maintenance services.

Generating Revenues

The process of bringing in income from business activities, sales, or services offered.

Drawing Account

An account used to track withdrawals made by the owner from the business for personal use.

Normal Balance

The side of an account (debit or credit) where increases to the account are recorded, depending on the account's nature.