If a Bond's Yield to Maturity Exceeds Its Coupon Rate

question 95

Multiple Choice

If a bond's yield to maturity exceeds its coupon rate, the bond's:

• A)current yield is equal to the coupon rate.
• B)price must be less than its par value.
• C)maturity value is more than its face value.
• D)current yield is equal to the capital gain on the maturity of the bond.
• E)maturity value is less than the bond's market value.

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Definitions:

Statutory Ratification

The process by which a legislative body formally approves an action, treaty, or agreement previously enacted or signed.

Overissued Shares

Stock shares that have been erroneously or unlawfully issued beyond the number authorized by the company's charter.

Debt

Money owed by one party (the debtor) to another (the creditor), typically arising from a transaction of financial borrowing.

Equity Securities

Financial instruments representing ownership interest in a company, such as stocks.