A Graph of a Bond's Price-Yield Curve Reveals All of the Following

question 38

Multiple Choice

A graph of a bond's Price-Yield curve reveals all of the following except

• A) Price moves inverse to yield
• B) The bond sells at a premium when the yield is below the coupon rate
• C) The bond sells at a discount when the yield is above the coupon rate
• D) The Price-Yield curve in concave
• E) All of the above are characteristics of the Price-Yield curve

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Definitions:

Retained Earnings

The portion of a company's profit that is held or retained and saved for future use, reinvestment, or to pay debt, rather than being distributed to shareholders as dividends.

Interest Expense

The cost incurred by an entity for borrowed funds, typically expressed as a yearly rate.

Net New Equity

Refers to the amount of money raised by a company through the issuance of new shares, subtracting any repurchases of existing shares.

Earnings Before Interest And Taxes

This represents the company’s earnings before the deduction of interest and tax expenses.