Which One of the Following Statements Is Correct Concerning Discount

question 89

Multiple Choice

Which one of the following statements is correct concerning discount bonds?

• A)The current yield is less than the yield to maturity.
• B)The bonds will be redeemed at maturity for less than face value.
• C)The coupon rate is greater than the current yield.
• D)The clean price is greater than the dirty price.
• E)Only zero coupon bonds sell at a discount.

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Definitions:

Statement of Cash Flows

A financial report that provides aggregate data regarding all cash inflows a company receives from its ongoing operations and external investment sources, as well as all cash outflows that pay for business activities and investments during a given period.

Operating Activities

Activities that relate directly to the operations of a company, including cash flows from selling goods and services.

Indirect Method

A method for preparing the cash flow statement where net income is adjusted for changes in balance sheet items to calculate cash flow from operating activities.

Depreciation Expense

This is the systematic allocation of the cost of a tangible asset over its useful life.