Assuming There Is No Default Risk, Both a Premium Bond

question 66

Multiple Choice

Assuming there is no default risk, both a premium bond and a discount bond must share which one of the following characteristics?

• A)market price less than a par value bond
• B)yield to maturity less than the coupon rate
• C)maturity value equal to a par value bond
• D)current yield equal to that of a par value bond
• E)coupon rate greater than the yield to maturity

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Definitions:

Outsourcing

The practice of contracting out certain business functions or processes to a third-party provider.

Fixed Cost

Fixed cost refers to expenses that do not vary with the level of production or sales, such as rent, salaries, and insurance.

Sunk Cost

Expenditures that have already been incurred and cannot be recovered, which should not affect future decision-making.

Opportunity Cost

Represents the benefit that is missed or given up when an investor, individual, or business chooses one alternative over another.