A 15-Year Bond with a Face Value of $1,000 Currently

question 77

Multiple Choice

A 15-year bond with a face value of $1,000 currently sells for $850.Which of the following statements is CORRECT?

• A) The bond's coupon rate exceeds its current yield.
• B) The bond's current yield exceeds its yield to maturity.
• C) The bond's yield to maturity is greater than its coupon rate.
• D) The bond's current yield is equal to its coupon rate.
• E) If the yield to maturity stays constant until the bond matures,the bond's price will remain at $850.

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Definitions:

Adjusting Entries

Are journal entries made at the end of an accounting period to allocate income and expenditure to the period in which they actually occurred, for the purpose of financial reporting accuracy.

Financial Statements

Documents that present an organization's financial activity and current financial condition, including the balance sheet, income statement, and cash flow statement.

Nominal Accounts

Accounts that are closed at the end of each accounting period, including revenue, expense, and withdrawal accounts.

Account Groups

Classifications of accounts that share common characteristics, used to organize and summarize financial information in the general ledger.