A 10-Year Bond with a 9% Annual Coupon Has a Yield

question 31

Multiple Choice

A 10-year bond with a 9% annual coupon has a yield to maturity of 8%.Which of the following statements is CORRECT?

• A) If the yield to maturity remains constant,the bond's price one year from now will be higher than its current price.
• B) The bond is selling below its par value.
• C) The bond is selling at a discount.
• D) If the yield to maturity remains constant,the bond's price one year from now will be lower than its current price.
• E) The bond's current yield is greater than 9%.

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Definitions:

Investing Activity

Transactions that involve purchasing or selling long-term assets and investments, which are reported in the investing section of a company's cash flow statement.

Equipment Sale

The process or transaction that involves selling machinery or technical gear used in manufacturing or operation.

Operating Activity

Business actions that relate directly to the production and delivery of goods and services, impacting the operating income.

Dividends Paid

The portion of a company's earnings distributed to shareholders as a payment.