The value of a bond with semiannual interest is greater than a bond with annual interest,everything else the same.

Question

Quizplus · Accepted Answer

This is true because the bond with semiannual interest payments will provide more frequent cash flow to the investor, which can be reinvested at a potentially higher rate of return. This results in a higher overall value for the bond compared to one with annual interest payments.

The Value of a Bond with Semiannual Interest Is Greater