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:

Duties

Obligations or responsibilities imposed on individuals or entities by law, contract, or morally expected roles.

Original Principal

The initial amount of money borrowed or invested, before the addition of interest or profits.

Principal's Instructions

Guidelines or orders given by a principal to an agent detailing how to perform specific tasks or duties.

Agent's Authority

The scope of power given to an agent to act on behalf of a principal in legal or business matters.