If a Bond Is Purchased at a Price Above the Face

question 26

Multiple Choice

If a bond is purchased at a price above the face value,the yield to maturity is:

• A)greater than the stated interest rate.
• B)the same as the stated interest rate.
• C)less than the stated interest rate.
• D)zero.
• E)of no significancE.

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Definitions:

Comets

Celestial bodies orbiting the sun, typically characterized by a nucleus of ice and dust and, when near the sun, a visible coma or tail.

Orbit

The curved path of a celestial object or spacecraft around a star, planet, or moon, under the influence of gravitational forces.

Pronoun

A word used to replace a noun or noun phrase, often to avoid repetition.

Committee

A group of people appointed or elected to perform a specified service or function.