Ignoring Default Risk,if a Bond's Expected Return Is Greater Than

question 65

True/False

Ignoring default risk,if a bond's expected return is greater than its required return,then the bond's market price must be greater than the present value of the bond's cash flows.

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Definitions:

Economic Profit

Economic profit is the difference between a firm's total revenue and its total costs, including both explicit and implicit costs, thereby measuring efficiency beyond accounting profit.

Long Run

In economics, the time period in which all factors of production and costs can be fully adjusted, contrasting with the short run where some costs are fixed.

Marginal Revenue

The additional income received from selling one more unit of a good or service.

Marginal Cost

The elevation in aggregate cost associated with creating an extra unit of a good or service.