If an Investor Purchases a Bond When Its Current Yield

question 91

Multiple Choice

If an investor purchases a bond when its current yield is higher 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:

Shirts

Articles of clothing worn on the upper body, usually having sleeves and a collar, and made from various fabrics.

Hot Drinks

Beverages that are served warm, such as coffee, tea, or hot chocolate.

Temperature

A physical quantity expressing the subjective perceptions of hot and cold, measured with thermometers.

Increased

Describes a situation where a quantity or value rises or grows, indicating a higher level than before.