Which One of the Following Must Be Correct for a Bond

question 90

Multiple Choice

Which one of the following must be correct for a bond currently selling at a premium?

• A)its coupon rate is variable.
• B)its current yield is lower than its coupon rate.
• C)its yield to maturity is higher than its coupon rate.
• D)its coupon rate is lower than the current market rate on similar bonds.

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Definitions:

Rock Climbing Shoe

A specialized footwear designed for rock climbing that enhances grip and foot support on climbing surfaces.

Monopoly

A market structure characterized by a single seller who has exclusive control over a product or service, leading to limited competition.

Perfect Price Discrimination

A pricing strategy where a seller charges the maximum possible price for each unit consumed that the buyer is willing to pay, thereby capturing every possible bit of consumer surplus.

Consumer Surplus

The variance in consumer spending intentions versus actual spending on a good or service.