Which of the Following Statements Is CORRECT

question 31

Multiple Choice

Which of the following statements is CORRECT?

• A) If a coupon bond is selling at par, its current yield equals its yield to maturity.
• B) If rates fall after its issue, a zero coupon bond could trade at a
• Price above its par value.
• C) If rates fall rapidly, a zero coupon bond's expected appreciation
• Could become negative.
• D) If a firm moves from a position of strength toward financial
• Distress, its bonds' yield to maturity would probably decline.
• E) If a bond is selling at a premium, this implies that its yield to
• Maturity exceeds its coupon rate.

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Definitions:

Judge

An official appointed to decide cases in a court of law and to administer justice according to the law.

Majority

More than half of a given group or quantity; often used to describe the age at which a person is legally acknowledged as an adult.

Concurring Opinion

An additional written opinion by a judge who agrees with the decision of the court but for different reasons than those expressed in the majority opinion.

Majority Opinion

The judicial opinion agreed to by more than half of the members of a court, setting out the decision of the court and an explanation of the rationale behind the court's decision.