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.

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Definitions:

Recognition

The identification of something as having been previously seen, heard, known, etc.

Three-Box Model

A model of memory that suggests information is processed through three stages: sensory memory, short-term (or working) memory, and long-term memory.

Short-Term Memory

The component of the memory system that holds a small amount of information for a brief period of time.

Priming

A psychological phenomenon where exposure to one stimulus influences the response to a subsequent stimulus, without conscious guidance or intention.