Which of the Following Is Correct for a Bond Currently

question 54

Multiple Choice

Which of the following is correct for a bond currently selling at a premium to par?

• A) Its current yield is higher than its coupon rate.
• B) Its current yield is lower than its coupon rate.
• C) Its yield to maturity is higher than its coupon rate.
• D) Its default risk is extremely low.

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Definitions:

Wilhelm Wundt

Often considered the father of modern psychology, he established the first psychology laboratory at the University of Leipzig in 1879.

Psychology

The scientific study of the mind and behavior.

Critical Thinking

The objective analysis and evaluation of an issue in order to form a judgment.

Phrenology

A now-discredited theory that suggested the bumps on the skull could predict mental traits and character.