When the Price of a Bond Is Below the Face

question 118

Multiple Choice

When the price of a bond is below the face value, the yield to maturity:

• A) is below the coupon rate.
• B) will be above the coupon rate.
• C) will equal the current yield.
• D) will equal the coupon rate.

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Definitions:

Entrepreneurial Talent

The unique set of abilities, creativity and initiative needed to identify market opportunities and create new businesses.

Implicit Costs

The opportunity costs of using resources owned by the firm for its own production instead of earning revenue from these resources elsewhere.

Implicit Cost

The opportunity cost equal to what a firm must give up in order to use resources that it already owns, without directly paying for them.

Leasing

A contractual arrangement where one party (the lessor) grants another party (the lessee) the right to use an asset for a specified period in return for regular payments.