Which of the following statements is CORRECT?
A. Assume that two bonds have equal maturities and are of equal risk, but one bond sells at par while the other sells at a premium above par. The premium bond must have a lower current yield and a higher capital gains yield than the par bond.
B. A bond's current yield must always be either equal to its yield to maturity or between its yield to maturity and its coupon rate.
C. If a bond sells at par, then its current yield will be less than its yield to maturity.
D. If a bond sells for less than par, then its yield to maturity is less than its coupon rate.
E. A discount bond's price declines each year until it matures, when its value equals its par value.
Answer: B
You might also like to view...
A fee tail is an ownership interest in land, recognized in only a minority of states, that limits succession of the property to members of the owner's family only.
Answer the following statement true (T) or false (F)
The Chester Company has issued 10%, nonparticipating, cumulative preferred stock with a total par value of $400,000 and common stock with a total par value of $800,000. No dividends are in arrears. How much cash will be paid to the preferred stockholders and the common stockholders, respectively, if cash dividends of $180,000 are distributed?
A) $80,000 to preferred and $100,000 to common B) $60,000 to preferred and $120,000 to common C) $55,000 to preferred and $125,000 to common D) $40,000 to preferred and $140,000 to common
Figure 4-1In Figure 4-1 above, E represents which stage of the consumer purchase decision process?
A. purchase decision B. postpurchase behavior C. alternative evaluation D. information search E. financial transaction
Popular, simple-to-use wiki hosting services are called ________
A) wiki homes B) wiki farms C) central wikis D) wiki docs