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- Subject
- Security Valuationfinance-mcqs › security-valuation
- Published
- 13 May 2023
- Last updated
- 28 May 2026
Explanation
A discount bond is one whose present value is less than its face value, meaning it is sold for less than its nominal amount. In contrast, a premium bond sells for more than its face value. Coupon bonds pay periodic interest, and interest bonds refer to bonds that pay interest, but these terms do not specifically describe the bond’s value relative to its 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 classification of a bond whose present market value exceeds its face value?
- 5.What is the term for the interest rate that investors expect to earn on a financial asset when determining its fair value?
- 6.Which type of bond is issued without periodic interest payments?
- 7.What term describes the weighted average period until an investment matures?
- 8.What term describes the percentage change in a bond's present value resulting from a given change in interest rates?
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