Which of the Following Statements Is CORRECT

question 72

Multiple Choice

Which of the following statements is CORRECT?

• A) The total return on a bond during a given year is based only on the coupon interest payments received.
• B) All else equal,a bond that has a coupon rate of 10% will sell at a discount if the required return for bonds of similar risk is 8%.
• C) The price of a discount bond will increase over time,assuming that the bond's yield to maturity remains constant.
• D) For a given firm,its debentures are likely to have a lower yield to maturity than its mortgage bonds.
• E) When large firms are in financial distress,they are almost always liquidated,whereas smaller firms are generally reorganized.