When a bond is sold, the selling price is generally equivalent to the present value of the bond payments.

Question

Quizplus · Accepted Answer

This is because the present value of the bond payments represents the current value of the future cash flows that the bond will provide to its holder. The selling price of the bond depends on the market demand and supply and may be influenced by factors such as prevailing interest rates, credit quality of the issuer, and the maturity date of the bond. However, in general, the selling price of the bond should reflect its present value.

When a Bond Is Sold, the Selling Price Is Generally