Which of the Following Statements Is CORRECT

question 75

Multiple Choice

Which of the following statements is CORRECT?

• A) If a 10-year, $1,000 par, zero coupon bond were issued at a price that gave investors a 10% yield to maturity, and if interest rates then dropped to the point where rd = YTM = 5%, the bond would sell at a premium over its $1,000 par value.
• B) If a 10-year, $1,000 par, 10% coupon bond were issued at par, and if interest rates then dropped to the point where rd = YTM = 5%, we could be sure that the bond would sell at a premium above its $1,000 par value.
• C) Other things held constant, including the coupon rate, a corporation would rather issue noncallable bonds than callable bonds.
• D) Other things held constant, a callable bond would have a lower required rate of return than a noncallable bond because it would have a shorter expected life.
• E) Bonds are exposed to both reinvestment risk and price risk. Longer-term low-coupon bonds, relative to shorter-term high-coupon bonds, are generally more exposed to reinvestment risk than price risk.

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Definitions:

Lineage

Lineage refers to a chain of ancestors and their descendants. A lineage may be the successive generations of organisms in a single population, the members of an entire species during an interval of geological time, or a group of related species descending from a common ancestor.

Evolutionary Faunas

Groups of animals that share a similar ecological role and have a continuous evolutionary history across geological times.

Cambrian Fauna

Diverse groups of marine animals that emerged during the Cambrian Period, marked by a rapid increase in complexity and variety of life forms.

Modern Fauna

The animals that inhabit the Earth during the current geological epoch, distinct from ancient or extinct species.