Which of the Following Statements Is CORRECT

question 28

Multiple Choice

Which of the following statements is CORRECT?

• A) If rates fall after its issue, a zero coupon bond could trade at a price above its par value.
• B) If rates fall rapidly, a zero coupon bond's expected appreciation could become negative.
• C) If a firm moves from a position of strength toward financial distress, its bonds' yield to maturity would probably decline.
• D) If a bond is selling at a premium, this implies that its yield to maturity exceeds its coupon rate.
• E) If a coupon bond is selling at par, its current yield equals its yield to maturity.

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Definitions:

Tires

Rubber-covered, air-filled cylindrical components that provide vehicles with traction and support.

Gain From Trade

The advantage obtained by countries, entities, or individuals from engaging in voluntary trade, due to the specialization and efficient allocation of resources.

Tire

A rubber covering, typically inflated or surrounding an air-filled tube, placed around a wheel to form a flexible contact with the road.

Microchip(s)

Small semiconductor devices that contain integrated circuits used in electronic devices for processing, memory, or specific control functions.