Which of the following statements is false? When the required rate of return on a bond equals its coupon rate, the bond will sell at its par value. When interest rates rise, bond prices on outstanding issues fall. When interest rates fall, bond prices on outstanding issues rise. The price of a bond at its maturity is equal to the final coupon payment. The required rate of return on an outstanding bond is the current rate of interest on similar bonds of equal risk.

Question

Nash Hamilton

Business

12 August, 17:33

Which of the following statements is false? When the required rate of return on a bond equals its coupon rate, the bond will sell at its par value. When interest rates rise, bond prices on outstanding issues fall. When interest rates fall, bond prices on outstanding issues rise. The price of a bond at its maturity is equal to the final coupon payment. The required rate of return on an outstanding bond is the current rate of interest on similar bonds of equal risk.

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Answers (1)

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Henry · Answer 1

Answer: The price of the bond at its bond at maturity is equal to its final coupon payment.

Explanation: Bonds are a kind of fixed income security issued by govt. and private entities to raise capital from the general public for specific projects.

In case of bonds the issuing entity receives a certain amount from holders against the right to own that bond. Holders are paid fixed periodic amounts for securities called coupon payments and at the end they are paid back the amount equal to its face value.

Thus, from the above we can conclude that statement D is false.