Which of the Following Statements Is CORRECT

question 86

Multiple Choice

Which of the following statements is CORRECT?

• A) If a coupon bond is selling at a premium, then the bond's current yield is zero.
• B) If a coupon bond is selling at a discount, then the bond's expected
• Capital gains yield is negative.
• C) If a bond is selling at a discount, the yield to call is a better
• Measure of the expected return than the yield to maturity.
• D) 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.
• E) If a coupon bond is selling at par, its current yield equals its yield to maturity.

---

Definitions:

Esterification

A chemical reaction that forms an ester through the reaction of a carboxylic acid and an alcohol.

Hydrolysis

A chemical reaction where water breaks down another compound, often resulting in the formation of two or more new compounds.

Spermaceti

A waxy substance found in the head cavity of the sperm whale, historically used in candles and ointments.

Potassium Hydroxide

A strong inorganic base with the formula KOH, used in various applications including as a cleaning agent, in the manufacture of biodiesel, and in the synthesis of other chemicals.