Which of the Following Statements Is CORRECT

question 79

Multiple Choice

Which of the following statements is CORRECT?

• A) 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.
• B) 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.
• C) If a bond sells at par,then its current yield will be less than its yield to maturity.
• D) If a bond sells for less than par,then its yield to maturity is less than its coupon rate.
• E) A discount bond's price declines each year until it matures,when its value equals its par value.

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Definitions:

Cost of Land

The price paid for a piece of land, including purchase price, closing costs, and any improvements necessary to make the land usable.

Land Improvements

Enhancements made to land such as landscaping, fencing, and lighting that increase its value, excluding the cost of the land itself.

Buildings

Physical structures owned or used by a business for its operations, considered as a fixed asset on the balance sheet.

Machinery and Equipment

Long-term assets used in the operation of a business, typically for manufacturing, processing, or office operations.