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- Subject
- Security Valuationfinance-mcqs › security-valuation
- Published
- 13 May 2023
- Last updated
- 28 May 2026
Explanation
A premium bond is one where the bond's current market price is higher than its nominal (face) value. This typically occurs when the bond's coupon rate is above prevailing market interest rates. In contrast, a discount bond sells below face value, and a par bond sells exactly at face value.
More Security Valuation MCQs
Practice related questions from the same subject.
- 1.Which term describes the inverse correlation between fluctuations in price and changes in interest rates?
- 2.Which term describes the direct correlation between fluctuations in price and changes in interest rates?
- 3.For zero-coupon bonds, how does the duration change as the maturity lengthens?
- 4.What is the term for the interest rate that investors expect to earn on a financial asset when determining its fair value?
- 5.Which type of bond is issued without periodic interest payments?
- 6.What term describes the weighted average period until an investment matures?
- 7.What term describes the percentage change in a bond's present value resulting from a given change in interest rates?
- 8.Which category of bonds provides periodic coupon payments to investors?
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