The Methods of Parametric Statistics Can Be Applied to Nominal

question 106

True/False

The methods of parametric statistics can be applied to nominal or ordinal data.

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Definitions:

Yield To Call

The return a bondholder gets if the bond is held until the call date, which is before the bond's actual maturity date.

Expected Capital Gains Yield

The anticipated rate of return from an investment due to an increase in its market price.

Reinvestment Rate Risk

Occurs when a short-term debt security must be “rolled over.” If interest rates have fallen, the reinvestment of principal will be at a lower rate, with correspondingly lower interest payments and ending value.

High-Coupon Bonds

Bonds that offer a higher-than-average interest rate (coupon) compared to others in the market, reflecting potentially higher risk.