Which of the Following Statements Is CORRECT

question 66

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) The expected capital gains yield on a bond will always be zero or positive because no investor would purchase a bond with an expected capital loss.

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Definitions:

Reliability

The consistency of a measure or instrument, indicating how dependably it produces similar results under the same conditions.

Validity

The extent to which a concept, conclusion, or measurement is well-founded and corresponds accurately to the real world.

DSM-5 Diagnoses

The categorization of mental disorders using the fifth edition of the Diagnostic and Statistical Manual of Mental Disorders, a standardized classification system.

Rigid Pattern

A fixed and unchangeable sequence or way of behaving, thinking, or doing something that is difficult to alter.