There Are Several Interesting Points About the Relationship Among the Coupon

question 17

Multiple Choice

There are several interesting points about the relationship among the coupon rate, market price, and yield to maturity. Which of the below is NOT one of these.

• A) If the market price is equal to the par value, then the yield to maturity is equal to the coupon rate.
• B) If the market price is less than the par value, then the yield to maturity is greater than the coupon rate.
• C) If the market price is greater than the par value, then the yield to maturity is greater than the coupon rate.
• D) If the market price is greater than the par value, then the yield to maturity is less than the coupon rate.

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Definitions:

Selling Prices

The amount a customer pays to purchase a product or service from a seller.

Variable Costs

Expenses that vary with the amount of output or sales.

Fixed Costs

Expenses that do not change in proportion to the activity of a business, such as rent or salaries.

Break-Even Point

The level of production or sales at which total revenues equal total expenses, resulting in neither profit nor loss.