A Bond Has a Current Yield That Is Equal to the Yield

question 103

Multiple Choice

A bond has a current yield that is equal to the yield to maturity. Given this, which one of the following must also be true?

• A)The bond must pay annual interest.
• B)The maturity value must be greater than the bond price.
• C)The bond can have any maturity date.
• D)The coupon rate must exceed the current yield.
• E)The price must exceed the par value.

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Definitions:

Long-Run Equilibrium

A state in which market supply and demand balance each other, resulting in stable prices and optimal resource allocation over time.

Expected Price Level

This term indicates the average of current and anticipated prices for goods and services in an economy.

Short-Run Aggregate-Supply Curve

A graphical representation that shows the relationship between the total production of goods and services at different price levels in the short term, assuming some input prices are fixed.

Unemployment Rate

The measure of individuals in the labor force who are without jobs but are actively trying to find employment.