As the Price of an Existing Bond Increases

question 39

Multiple Choice

As the price of an existing bond increases,

• A)The current yield decreases.
• B)The par value decreases.
• C)The coupon rate decreases.
• D)There is increased risk that the U.S.Treasury will default on the bond.

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Definitions:

Communist

A person who supports or believes in the principles of communism, a socio-economic ideology that advocates for the common ownership of the means of production and the absence of social classes.

People's Republic of China

A sovereign state in East Asia, established in 1949, governed by the Communist Party of China, with Beijing as its capital.

1949

The year 1949 marks a significant period in global history, witnessing the formation of the North Atlantic Treaty Organization (NATO) and the establishment of the People's Republic of China.

Context-dependent Memory

The theory that information learned in a particular situation or environment is better remembered when in that same situation or environment.