This Question: 1 pt 23 of 40 (0 complete) | This Test: 40 pts possible US. Savin

Question

This Question: 1 pt 23 of 40 (0 complete) | This Test: 40 pts possible US. Savings Bonds are sold at a discount. The face value of the bond represents its value on its future maturity date Therefore 0 A, the current prices of all $50 face value bonds will be the same, regardless of their maturity dates because they will all be worth S50 in the future. B, the current price of a $50 face value bond will be higher if interest rates increase ° C, the current price of a $50 face value bond that matures in 1 0 years will be less than the current price of a $50 face value bond that matures in 5 years the current price of a S50 face value bond that matures in 10 years will be greater than the current price of a S50 face value bond that matures in 5 years. D. ext tons of tio... I solutio Click to select your answer pert Answen can help ri

Explanation / Answer

Price of a bond decreases with increasing maturity due to greter discount applied to face value.

Similarly current price decreases with rising interest rate as greater interest means greater discounting factor.

So, option (c) is only correct as 10years bond will have greater discounting factor as discussed

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