Which of the following statements is CORRECT?

A. A bond is likely to be called if its market price is below its par value.
B. Even if a bond's YTC exceeds its YTM, an investor with an investment horizon longer than the bond's maturity would be worse off if the bond were called.
C. A bond is likely to be called if its market price is equal to its par value.
D. A bond is likely to be called if it sells at a discount below par.
E. A bond is likely to be called if its coupon rate is below its YTM.


Answer: B

Business

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