When a Bond's Yield to Maturity Is Less Than the Bond's

question 14

Multiple Choice

When a bond's yield to maturity is less than the bond's coupon rate, the bond:

• A)had to be recently issued.
• B)is selling at a premium.
• C)has reached its maturity date.
• D)is priced at par.
• E)is selling at a discount.

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Definitions:

Depreciation Expense

The portion of the cost of a fixed asset that is considered an expense due to its wear and tear over a specific period.

Useful Life

The estimated period over which a fixed asset is expected to be usable by the entity, affecting its depreciation calculation.

Straight-Line Method

An accounting method of depreciating fixed assets evenly over their useful lives.

Depreciation Expense

Depreciation expense is the systematic allocation of the cost of a tangible asset over its useful life, reflecting the asset's consumption, wear and tear, or obsolescence.