If a Bond Offers a Current Yield of 5% and a Yield

question 34

Multiple Choice

If a bond offers a current yield of 5% and a yield to maturity of 5.45%,then the:

• A) bond is selling at a discount.
• B) bond has a high default premium.
• C) promised yield is not likely to materialize.
• D) bond must be a Treasury Inflation-Protected Security.

---

Definitions:

Contract Sale

An agreement between a buyer and a seller where the payment for goods or services is extended over a period, often related to real estate transactions.

Unidentified Principal

A party in a transaction whose identity is not disclosed or known to the other parties involved.

Liable

Being legally responsible for something, especially in the context of debts or wrongful acts.

Transaction

A business deal or exchange between two or more parties, involving the transfer of goods, services, or funds.