If an Investor Purchases a Bond When Its Current Yield

question 91

Multiple Choice

If an investor purchases a bond when its current yield is higher than the coupon rate,then the bond's price will be expected to:

• A) decline over time, reaching par value at maturity.
• B) increase over time, reaching par value at maturity.
• C) be less than the face value at maturity.
• D) exceed the face value at maturity.

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Definitions:

Variables

Elements, features, or factors that are likely to vary or change among individuals or experiments.

Predictors

Variables in statistical models that are used to forecast or anticipate the outcome of a dependent variable.

Explained Variance

The portion of the total variance in a dataset that is attributable to the model's inputs.

Criterion

A standard or principle by which something is judged or decisions are made.