๐Ÿ“ข Too many exams? Donโ€™t know which one suits you best? Book Your Free Expert ๐Ÿ‘‰ call Now!

  • google app store apple app store
  • โœ–

      Question

      Which of the following is NOT CORRECT about value of a

      bond? i. If the bond is at discount, the price will decline over time towards its par value ii. If a bond is at par, its price will remain the same till the maturity iii. A zero coupon bond has only one cash flow
      A Only i Correct Answer Incorrect Answer
      B Only i and ii Correct Answer Incorrect Answer
      C Only ii & iii Correct Answer Incorrect Answer
      D Only iii Correct Answer Incorrect Answer
      E All the above are correct Correct Answer Incorrect Answer

      Solution

      If the bond is at premium, the price will decline over time towards its par value and if the bond is at discount, the price will increase over time towards its par value Zero coupon bonds have no coupon payments therefore the only cash flow is the payment at maturity of the bond.

      Practice Next

      Relevant for Exams:

      ask-question