The market value (price) of a bond is equal to: (a) The present value of all future cash payments provided by a bond. (b) The present value of all future interest payments provided by a bond. (c) The present value of the principal for an interest-bearing bond. (d) The future value of all future cash payments provided by a bond. (e) The future value of all future interest payments provided by a bond.

(a) The present value of all future cash payments provided by a bond.

Explanation:

(a) The present value of all future cash payments provided by a bond.

The cash payment refer to both concepts, the coupon payment and the maturity.

Other option:

(d) (e)

The market value refer to the present value, because is the value today, so it cannot be based on a future value

(b) doing so, ignores the maturity payment. When the bonds is near maturity date, this value grows and is more important than the interest payment.

if a $1000 5% the bond matures in 2 years, the main componet will be the present value of the maturity not the interest.

(c) only consider the accrued interet at moment of sale, ignore the value of all the payment to come, the market value of the bonds.

Plus this will mean the market value of the bond will drop after each payment, becausethe accrued interest drop to zero. that doesn't happen.