Bonds A, B, and C All Have a Maturity of 15

question 81

Multiple Choice

Bonds A, B, and C all have a maturity of 15 years and a yield to maturity of 9%.Bond A's price exceeds its par value, Bond B's price equals its par value, and Bond C's price is less than its par value.Which of the following statements is CORRECT?

• A) Bond A has the most interest rate risk.
• B) If the yield to maturity on the three bonds remains constant, the prices of the three bonds will remain the same over the next year.
• C) If the yield to maturity on each bond increases to 8%, the prices of all three bonds will decline.
• D) Bond C sells at a premium over its par value.
• E) If the yield to maturity on each bond decreases to 6%, Bond A will have the largest percentage increase in its price.

---

Definitions:

Opposing Party

The other side in a legal dispute or litigation.

Work Product Doctrine

A legal principle that protects materials prepared in anticipation of litigation from being disclosed to the opposing party.

Case Preparation

The process of organizing facts, evidence, and legal arguments prior to presenting a case in court or to another decision-making body.

Trial

A formal examination of evidence before a judge, and possibly a jury, in order to decide guilt in a case of criminal or civil proceedings.