Which of the Following Statements Is CORRECT

question 14

Multiple Choice

Which of the following statements is CORRECT?

• A)The yield to maturity for a coupon bond that sells at a premium consists entirely of a positive capital gains yield; it has a zero current interest yield.
• B)The market value of a bond will always approach its par value as its maturity date approaches.This holds true even if the firm has filed for bankruptcy.
• C)Rising inflation makes the actual yield to maturity on a bond greater than a quoted yield to maturity that is based on market prices.
• D)The yield to maturity on a coupon bond that sells at its par value consists entirely of a current interest yield; it has a zero expected capital gains yield.
• E)On an expected yield basis, the expected capital gains yield will always be positive because an investor would not purchase a bond with an expected capital loss.

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Definitions:

Tractors

Agricultural machinery used for plowing, tilling, planting, and other farming operations.

Bicycles

Human-powered, pedal-driven vehicles with two wheels attached to a frame, one behind the other, used for transportation, recreation, or sport.

Production

The process of combining various material inputs and immaterial inputs (plans, know-how) to make something for consumption (the output).

Opportunity Cost

The cost of forgoing the next best alternative when making a decision or taking an action.