The price of a corporate bond is the present value of its face amount at the market or effective rate of interest: Multiple Choice Plus the present value of all future interest payments at the market or effective rate of interest. Plus the present value of all future interest payments at the stated rate of interest. Reduced by the present value of all future interest payments at the market or effective rate of interest. Reduced by the present value of all future interest payments at the stated rate of interest.

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Business

Philip Atkinson

3 August, 11:26

The price of a corporate bond is the present value of its face amount at the market or effective rate of interest: Multiple Choice Plus the present value of all future interest payments at the market or effective rate of interest. Plus the present value of all future interest payments at the stated rate of interest. Reduced by the present value of all future interest payments at the market or effective rate of interest. Reduced by the present value of all future interest payments at the stated rate of interest.

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Adrianna Nelson · Answer 1

The correct option is the price of a corporate bond is the present value of its face value at the market or effective rate of interest plus the present value of all future interest payments at the market or effective interest rate

Explanation:

The price of a bond is usually the present value of the face value and the all future coupon interest payments using the market rate or yield to maturity or effective interest rate as the discounting rate.

A rational bond investor would not be willing to pay more than today's equivalent of all bond cash flows (face value and interests) as bond price.