Which One of the Following Statements Is Correct Concerning Premium

question 48

Multiple Choice

Which one of the following statements is correct concerning premium bonds?

• A)The premium increases when interest rates increase.
• B)The coupon rate is less than the current yield.
• C)As the time to maturity decreases, the premium increases.
• D)The yield to maturity is less than the coupon rate.
• E)The par value exceeds the face value.

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Definitions:

Economic Profits

The surplus remaining after total costs are deducted from total revenue, factoring in both explicit and opportunity costs.

Normal Rate

Refers to the standard, expected rate in financial or economic contexts, often used as a benchmark.

Short Run

The period of time for which two conditions hold: The firm is operating under a fixed scale (fixed factor) of production, and firms can neither enter nor exit an industry.

Total Variable Costs

The sum of all costs that vary with the level of output or production.