Which of the Following Statements Is Correct

question 65

Multiple Choice

Which of the following statements is correct?

• A) Rising inflation makes the actual yield to maturity on a bond greater than the quoted yield to maturity which is based on market prices.
• B) The yield to maturity for a coupon bond that sells at its par value consists entirely of an interest yield;it has a zero expected capital gains yield.
• C) On an expected yield basis,the expected capital gains yield will always be positive because an investor would not purchase a bond with an expected capital loss.
• D) The market value of a bond will always approach its par value as its maturity date approaches.This holds true even if the firm enters bankruptcy.
• E) All of the above statements are false.