The par value of a bond is essentially independent of the market value of a bond

Question

The par value of a bond is essentially independent of the market value of a bond. The yield to maturity of a bond is the current value of the bond. An increase in interest rates will cause the value of a bond to increase. The stated coupon rate of interest has no effect on the market price of a bond. Junk bonds differ from high-yield bonds in that junk bonds will almost always carry a lower rating than high-yield bonds. A firm's cash account is not considered in determining its liquidity. The operating profit margin is a measure of asset efficiency. The higher the rate used to compound a given sum, the larger it will be at some future date. Valuation does not support the financial officer's objective of maximizing the value of the firm's common stock. The intrinsic value of an asset can be defined as the present value of the asset's expected future cash flows.

Explanation / Answer

16) True because Par value is the stated value of instrument at issuance and Market value is the actual price investors pay for securities.

17) true

18) False - An Increase in Interest rate will cause the bond prices to fall.

19) False - The Coupon rate of interest has effect on the market price of bonds

20) True

21) FAlse

22) True

23) True

24) False

25) True

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