Bond X and Bond Y Both Are Issued by the Same

question 218

Multiple Choice

Bond X and bond Y both are issued by the same company. Each of the bonds has a maturity value of $100,000 and each matures in 10 years. Bond X pays 8% interest while bond Y pays 9% interest. The current market rate of interest is 8%. Which of the following is correct?

• A) Both bonds sell for the same amount.
• B) Bond X sells for more than bond Y.
• C) Bond Y sells for more than bond X.
• D) Both bonds sell at a discount.

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Definitions:

Fraction

A mathematical expression representing the division of one quantity by another, indicating a part of a whole.

Acres

A unit of measurement for land, equivalent to 43,560 square feet.

Fenced

Enclosed or separated by a barrier, often for security or privacy purposes.

Variety

The range or assortment of different types of goods, products, or services available.