If the Current Price of a Bond Is Less Than

question 72

Multiple Choice

If the current price of a bond is less than its face value,

• A)an investor will receive a capital gain by holding the bond until maturity.
• B)the yield to maturity must be less than the current yield.
• C)the coupon rate must be greater than the current yield.
• D)the coupon rate must be equal to the current yield.

---

Definitions:

Functional Currency

The primary currency used by a business or entity in its financial operations and reporting.

Current Monetary Assets

Assets held by a company that are in the form of cash or can be easily converted into cash within a short period, typically one year.

Total Liabilities and Equity

The sum of all liabilities (what a company owes) plus the owners' equity (the original investment plus any retained earnings).

Exchange Rates

The rate at which one currency can be exchanged for another, affecting international trade and investments.