When price of bond is calculated below its par value, it is classified as___________?
Correct answer: B. Discount bond
- A. classified bond
- B. Discount bond
- C. Compound bond
- D. Consideration earning
Explanation
A bond selling below its par or face value is sold at a discount, so it is called a discount bond. The difference between par value and the lower purchase price is the discount.
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Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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