Asked by Brooke Ramsey on Jul 12, 2024
Verified
The face value of a bond:
A) Is defined as the current market price.
B) Includes the principal plus the total interest due.
C) Is commonly defined as $10,000.
D) Is the principal amount paid at maturity.
E) Is defined as the principal amount minus the interest due at maturity.
Face Value
Face value refers to the nominal or dollar value printed on a security or financial instrument, such as a bond or stock certificate.
Principal Amount
The initial size of a loan or debt on which interest is calculated, or the original investment amount in a financial instrument.
Maturity
The date on which a financial obligation must be repaid in full.
- Understand the relationship between bond face value, market value, and maturity dynamics.
Verified Answer
CF
Cagayare fanax FanaxJul 18, 2024
Final Answer :
D
Explanation :
The face value of a bond is the principal amount that is repaid to the investor at maturity. It does not fluctuate like market price and is not inclusive of interest payments.
Learning Objectives
- Understand the relationship between bond face value, market value, and maturity dynamics.