U.S. Savings Bonds are sold at a discount. The face value of the bond represents its value on its future maturity date. Therefore A. the current price of a $50 face value bond that matures in 10 years will be less than the current price of a $50 face value bond that matures on 5 years. B. the current price

U.S. Savings Bonds are sold at a discount. The face value of the bond represents its value on its future maturity date. Therefore

A. the current price of a $50 face value bond that matures in 10 years will be less than the current price of a $50 face value bond that matures on 5 years.

B. the current price of a $50 face value bond that matures in 10 years will be greater than the current price of a $50 face value bond that matures in 5 years.

C. the current prices of all $50 face value bonds will be the same, regardless of their maturity dates because they will all be worth $50 in the future.

D. the current price of a $50 face value bond will be higher if interest rates increase.

Expert Answer

Bonds can be issue at par value, discount, or premium. Based on issue price of the bond, interest can be varied. Here, the bonds are sold at discount. It means the interest rate of the bond is greater… View the full answer