Which of the Following Statements Is CORRECT

question 65

Multiple Choice

Which of the following statements is CORRECT?

• A) A zero coupon bond's current yield is equal to its yield to maturity.
• B) If a bond's yield to maturity exceeds its coupon rate,the bond will sell at par.
• C) All else equal,if a bond's yield to maturity increases,its price will fall.
• D) If a bond's yield to maturity exceeds its coupon rate,the bond will sell at a premium over par.
• E) All else equal,if a bond's yield to maturity increases,its current yield will fall.

Apply financial knowledge to make informed decisions regarding investment and loan options.

Calculate the equivalent value of combined payments due at different times using given rates of return.

Understand and calculate the value of investments and loans with variable interest rates over time.

Understand the concepts of compound interest and its application to financial calculations.

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Definitions:

Festinger

Refers to Leon Festinger, a psychologist best known for his cognitive dissonance theory, which explores the discomfort felt by individuals when their beliefs or behaviors are inconsistent.

Cognitive Consistency

A psychological theory suggesting that individuals are motivated to maintain consistency among their cognitions, leading to changes in attitudes, beliefs, or behaviors when inconsistencies occur.

Festinger and Carlsmith's Experiment

A psychological study on cognitive dissonance which demonstrated how attitude change can result from forced compliance behavior.

Enjoyable

Experiences or activities that provide pleasure, satisfaction, or joy, making them desirable to engage in.