Final answer:
The present value of all future cash payments of a bond equates to its current market value, which can differ from its face value based on market rates and perceived credit risk. Therefore correct option is A
Step-by-step explanation:
The present value of all future cash payments promised by a bond is equal to the current market value of the bond. Real-world calculations take into account not only market interest rates but also the riskiness of the borrower's ability to repay. The price of a bond is indeed the present value of a stream of future expected payments, which reflects the most a buyer would be willing to pay for the bond at any given time. This figure may diverge from the bond's face value due to various factors, including changes in market interest rates and perceived credit risk.