Which of the Following Statements Is CORRECT

question 22

Multiple Choice

Which of the following statements is CORRECT?

• A) A bond's current yield must always be either equal to its yield to maturity or between its yield to maturity and its coupon rate.
• B) If a bond sells at par, then its current yield will be less than its yield to maturity.
• C) If a bond sells for less than par, then its yield to maturity is less than its coupon rate.
• D) A discount bond's price declines each year until it matures, when its value equals its par value.
• E) Assume that two bonds have equal maturities and are of equal risk, but one bond sells at par while the other sells at a premium above par.The premium bond must have a lower current yield and a higher capital gains yield than the par bond.

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Definitions:

Discrimination

The practice of injustice towards individuals by discriminating against them based on race, age, or sex.

Photon

A quantum of electromagnetic radiation, often regarded as a discrete particle of light with zero rest mass and energy dependent on its frequency.

Particle Nature

The characteristic of matter to exhibit properties of particles, including mass and discrete boundaries, observable in phenomena like the photoelectric effect.

Wave Nature

Wave Nature relates to the characteristics of particles, such as photons and electrons, to exhibit properties typical of waves, including interference and diffraction.