A higher bond price indicates a lower cost of new external funds.

Name: A higher bond price indicates a lower cost of new external funds.
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Question

Quizplus · Accepted Answer

As the bond price increases, the yield or interest rate on the bond decreases. This means that the cost of borrowing funds through issuing new bonds is lower, which is reflected in the higher bond price. Therefore, a higher bond price does indicate a lower cost of new external funds.

A Higher Bond Price Indicates a Lower Cost of New