If the Coupon Rate on an Outstanding Bond Is Lower

question 66

Multiple Choice

If the coupon rate on an outstanding bond is lower than the relevant current interest rate,then the yield to maturity will be:

• A) lower than current interest rates.
• B) equal to the coupon rate.
• C) higher than the coupon rate.
• D) lower than the coupon rate.

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Definitions:

Element

A substance that cannot be broken down into simpler substances by chemical means, consisting of atoms with the same number of protons.

Chemically Bonded

The state of being joined or connected through chemical bonds, which involve the sharing or exchange of electrons between atoms.

Homogeneous

A descriptor for a mixture or substance that has the same uniform appearance and composition throughout.

Mixture

A physical combination of two or more substances in which each substance retains its own chemical identity and properties.