Which of the Following Statements Is Most Correct

question 13

Multiple Choice

Which of the following statements is most correct?

• A) All else equal, a bond that has a coupon rate of 10 percent will sell at a discount if the required return for a bond of similar risk is 8 percent.
• B) Debentures generally have a higher yield to maturity relative to mortgage bonds.
• C) If there are two bonds with equal maturity and credit risk, the bond which is callable will have a higher yield to maturity than the bond which is noncallable.
• D) Answers a and c are correct.
• E) Answers b and c are correct.

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Definitions:

MRP

Marginal Revenue Product; the additional revenue generated by employing one more unit of a factor, like labor or capital.

Substitutes

Products or services that can be used in place of each other, where the presence of one reduces the demand for another.

Price Capital

The valuation of capital assets based on their cost or market value, contributing to the overall price level of investments.

Demand

The quantity of a good or service that consumers are willing and able to purchase at various price levels at a given period.