Assume You Are Considering Two Bonds Identical in Every Way

question 276

True/False

Assume you are considering two bonds identical in every way but for coupon frequency-bond A pays interest annually, and bond B pays interest semi-annually. Then, if they have the same price, the yield-to-maturity on bond A will always be greater than that on bond
B.

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Definitions:

Microeconomics

The branch of economics that studies the behavior of individuals and firms in making decisions regarding the allocation of scarce resources.

Margin

The difference between the selling price of a product or service and its production or acquisition costs, often expressed as a percentage of the selling price.

Incentives

Incentives are benefits or rewards provided to encourage specific behaviors or actions, playing a crucial role in economic decision-making.