If a Bond Is Selling for a Discount, That Implies

question 8

Multiple Choice

If a bond is selling for a discount, that implies
​1) interest rates have fallen
2) interest rates have risen
3) the yield to maturity exceeds the current yield
4) the yield to maturity is less than the current yield

• A)​1 and 3
• B)​1 and 4
• C)​2 and 3
• D)​2 and 4

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Definitions:

Curve of Forgetting

A theory describing how information is lost over time when there is no attempt to retain it.

Serial Position Curve

A phenomenon in educational and cognitive psychology that describes how the position of an item in a series affects the probability of it being recalled.

Free Recall Curve

A graphical representation showing the pattern of memory recall over time, typically indicating that items at the beginning and end of a list are remembered better than those in the middle.

Mirage Effect

An optical phenomenon where light rays are bent to produce a displaced image of distant objects or the sky, often seen on hot surfaces.