Consider a Hydro Quebec bond with a face value of $1000,and a present value of $1175.If this bond is offered for sale at $1025,then
A) excess supply of this bond will drive the price down until it reaches its face value.
B) individuals will purchase the bond at the offer price which will drive down the price further.
C) excess demand for this bond will drive the price up until it reaches its equilibrium market price of $1175.
D) the equilibrium market price of this bond has been achieved.
E) Hydro Quebec will be forced to change the face value of the bond.
Correct Answer:
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