Bonds A, B, and C All Have a Maturity of 15

question 81

Multiple Choice

Bonds A, B, and C all have a maturity of 15 years and a yield to maturity of 9%.Bond A's price exceeds its par value, Bond B's price equals its par value, and Bond C's price is less than its par value.Which of the following statements is CORRECT?

• A) Bond A has the most interest rate risk.
• B) If the yield to maturity on the three bonds remains constant, the prices of the three bonds will remain the same over the next year.
• C) If the yield to maturity on each bond increases to 8%, the prices of all three bonds will decline.
• D) Bond C sells at a premium over its par value.
• E) If the yield to maturity on each bond decreases to 6%, Bond A will have the largest percentage increase in its price.

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Definitions:

Rational-Emotive

A form of psychotherapy that identifies irrational beliefs, challenges them, and encourages the adoption of more rational and self-helping thoughts.

Repressed Material

Thoughts, memories, or impulses that are pushed out of conscious awareness due to being considered psychologically threatening or unacceptable.

Positive Transference

In psychotherapy, it describes the phenomenon where a patient projects favorable emotions towards the therapist, often mirroring feelings associated with other relationships.

Unconditional Positive Regard

Unqualified caring and nonjudgmental acceptance of another.