Which of the Following Statements Is Correct

question 40

Multiple Choice

Which of the following statements is correct?

• A) The discount or premium on a bond can be expressed as the difference between the coupon payment on an old bond which originally sold at par and the coupon payment on a new bond,selling at par,where the difference in payments is discounted at the new market rate.
• B) The price of a coupon bond is determined primarily by the number of years to maturity.
• C) On a coupon paying bond,the final interest payment is made one period before maturity and then,at maturity,the bond's face value is paid as the final payment.
• D) The actual capital gains yield for a one-year holding period on a bond can never be greater than the current yield on the bond.
• E) All of the above statements are false.

---

Definitions:

United States

A country located primarily in North America, consisting of 50 states and a federal district.

World Price

The international market price of a good or service, determined by global supply and demand conditions.

Consumer Surplus

The difference between the total amount consumers are willing and able to pay for a good or service and the total amount they actually pay.

Equilibrium

A state in which market supply and demand balance each other, and as a result, prices become stable.