Final answer:
The principal value of a bond in the U.S. is most commonly $1,000. Changes in interest rates can affect the price of a bond.
Step-by-step explanation:
The principal value of a bond refers to the face value or the par value of the bond, which is the amount that will be repaid to the bondholder at maturity. In the U.S., the principal value of a bond is most commonly $1,000 (option B). This means that when the bond matures, the bondholder will receive $1,000 as the principal amount.
When calculating the price of a bond, changes in interest rates can affect its market value. If interest rates rise, the value of existing bonds with lower coupon rates becomes less attractive, and their prices may fall below the face value. On the other hand, if interest rates decrease, existing bonds with higher coupon rates become more desirable, and their prices may rise above the face value.
In summary, in the U.S., the most common principal value of a bond is $1,000 (option B). Changes in interest rates can impact the price of a bond, potentially causing it to be higher or lower than its face value.