Which of the Following Statements Is CORRECT

question 13

Multiple Choice

Which of the following statements is CORRECT?

• A) If a bond is selling at a discount, the yield to call is a better measure of return than the yield to maturity.
• B) On an expected yield basis, the expected capital gains yield will always be positive because an investor would not purchase a bond
• With an expected capital loss.
• C) On an expected yield basis, the expected current yield will always be positive because an investor would not purchase a bond that is
• Not expected to pay any cash coupon interest.
• D) If a coupon bond is selling at par, its current yield equals its
• Yield to maturity.
• E) The current yield on Bond A exceeds the current yield on Bond B; therefore, Bond A must have a higher yield to maturity than Bond B.

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Definitions:

Capital Investment

Funds used by a company to acquire, upgrade, and maintain physical assets such as property, industrial buildings, or equipment.

Mutual Agency

A principle in partnership where each partner has the authority to bind the partnership in contracts and agreements, affecting all partners.

Articles of Partnership

A document that formalizes an agreement between parties to enter into a business partnership, outlining the rights, responsibilities, and capital contributions of each partner.

Profit and Loss Ratio

Typically refers to the profit margin, which measures the efficiency of a company in generating profits from its operations, calculated as net income divided by revenue.