Which of the Following Is Correct for a Bond Investor

question 81

Multiple Choice

Which of the following is correct for a bond investor whose bond offers a 5% current yield and an 8% yield to maturity?

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

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Definitions:

Prokaryotes

Microorganisms characterized by the absence of a nucleus, including bacteria and archaea.

Representatives

Individuals or entities that stand in for or act on behalf of others in a particular context or scenario.

Bacteria

Microscopic, single-celled organisms found in virtually all environments, both harmful and beneficial to humans.

Lord Kelvin

A title for William Thomson, a prominent 19th-century physicist known for his work in thermodynamics and for developing the Kelvin scale of temperature.