If an Investor Purchases a Bond When Its Current Yield

question 127

Multiple Choice

If an investor purchases a bond when its current yield is less than the coupon rate, then the bond's price will be expected to:

• A)Decline over time, reaching par value at maturity
• B)Increase over time, reaching par value at maturity
• C)Be less than the face value at maturity
• D)Exceed the face value at maturity

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Definitions:

Infectious Bacteria

Bacteria that can cause disease in their host; they can spread from person to person or through contaminated surfaces.

1,2-Ethanediol

Another name for ethylene glycol, a colorless, sweet-tasting organic compound used primarily as an antifreeze in cooling and heating systems.

Ethylene Glycol

A colorless, sweet-tasting organic compound used primarily as an antifreeze in cooling and heating systems.

Carbon

Carbon is a chemical element with symbol C and atomic number 6, known for its role in organic chemistry and its ability to form a vast number of compounds.