The Yield to Call Is Always Higher Than the Yield

question 94

True/False

The yield to call is always higher than the yield to maturity for coupon bonds.

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Definitions:

American Calls

Options contracts that allow the buyer to exercise the option to buy the underlying asset at the strike price at any time before expiration.

Option Expiration

The date on which an options contract becomes void and the holder no longer has rights for which it provides.

Shares

Units of ownership interest in a corporation or financial asset that provide for an equal distribution in any profits, if any are declared, in the form of dividends.

Strike Price

The predetermined price at which an option can be exercised, allowing the holder to buy (in the case of a call option) or sell (in the case of a put option) the underlying security.