Which of the Following Statements Is CORRECT

question 53

Multiple Choice

Which of the following statements is CORRECT?

• A) All else equal, an increase in interest rates will have a greater effect on the prices of short-term than long-term bonds.
• B) All else equal, an increase in interest rates will have a greater effect on higher-coupon bonds than it will have on lower-coupon bonds.
• C) If a bond's yield to maturity exceeds its coupon rate, the bond's price must be less than its maturity value.
• D) If a bond's yield to maturity exceeds its coupon rate, the bond's current yield must be less than its coupon rate.
• E) If two bonds have the same maturity, the same yield to maturity, and the same level of risk, the bonds should sell for the same price regardless of the bond's coupon rates.

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Definitions:

Personal Identity

The self defined in terms of unique personal attributes or unique interpersonal relationships.

Unique Attributes

Characteristics or qualities that make an individual or object distinct from others.

Interpersonal Relationships

The strong, deep, or close associations or acquaintances between two or more people that may range in duration from brief to enduring.

Rosebuds

The young, unopened flowers of a rose plant, often symbolizing beauty, youth, or a beginning phase.