Which of the Following Statements Is Most Correct

question 58

Multiple Choice

Which of the following statements is most correct?

• A) If a bond sells for less than par, then its yield to maturity is less than its coupon rate.
• B) If a bond sells at par, then its current yield will be less than its yield to maturity.
• C) Assuming that both bonds are held to maturity and are of equal risk, a bond selling for more than par with ten years to maturity will have a lower current yield and higher capital gain relative to a bond that sells at par.
• D) Answers a and c are correct.
• E) None of the answers above is correct.

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Definitions:

Dishonored

Dishonored describes a financial instrument, such as a check or promissory note, that has been refused acceptance or payment.

Promissory Note

A financial instrument involving a written promise by one party to pay another party a definite sum of money either on demand or at a specified future date.

Presentment

The act of formally presenting a document, such as a check or draft, for acceptance or payment.

Dishonored

Refers to a financial instrument (check, promissory note) that is not accepted or paid upon presentation.