A 12-Year Bond Has an Annual Coupon of 9

question 48

Multiple Choice

A 12-year bond has an annual coupon of 9%.The coupon rate will remain fixed until the bond matures.The bond has a yield to maturity of 7%.Which of the following statements is CORRECT?

• A) If market interest rates decline,the price of the bond will also decline.
• B) The bond is currently selling at a price below its par value.
• C) If market interest rates remain unchanged,the bond's price one year from now will be lower than it is today.
• D) The bond should currently be selling at its par value.
• E) If market interest rates remain unchanged,the bond's price one year from now will be higher than it is today.

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Definitions:

Stakeholder Responsibility

The obligation of an organization to consider the impacts of its decisions and activities on all its stakeholders.

Obstructionist Strategy

A business strategy where a company takes active steps to block or derail certain actions or initiatives, often for competitive or ethical reasons.

Corporate Social Responsibility

A business model that involves companies integrating social and environmental concerns in their operations and interactions with their stakeholders.

Prevailing Societal Norms

The dominant principles, standards, or behaviors that are accepted and practiced within a society.