Quizzes & Puzzles0 min ago
Accounting-any help would be greatly appreciated.?
2 Answers
if the market price of a bond exceeds its face amount:
a. the coupon rate is less than the market interest rate.
b. the coupon rate is more than the market interest rate
c. the company's retun on investment and working capital have been increasing over time
d. the maturity rate has been declining.
thank you in advance.
i think the answer is C but im second guessing thinking it may be A.. could anyone help please thank you!
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Anyway a quick googl search will help you. In fact here is your question and an answer!
http://passthe7.blogspot.com/2009/04/bond-see- saw.html
Anyway a quick googl search will help you. In fact here is your question and an answer!
http://passthe7.blogspot.com/2009/04/bond-see- saw.html
Not quite the question posed here, factor30. Choices c and d are nonsensical in this context (ROI and working capital have nothing to do with bond prices; "maturity rate" is meaningless). So think what happens to the value of a stream of cash flows (which is what a bond is) when the discount rate goes up or down, and decide between a & b.