Assuming There Is No Default Risk,both a Premium Bond and a Discount

question 6

Multiple Choice

Assuming there is no default risk,both a premium bond and a discount bond must share which one of the following characteristics?

• A) market price less than a par value bond
• B) yield-to-maturity less than the coupon rate
• C) maturity value equal to a par value bond
• D) current yield equal to that of a par value bond
• E) coupon rate exceeding the yield-to-maturity

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Definitions:

Cro-Magnon

Common name for the first fossils to be designated Homo sapiens.

Spears

Long-shafted weapons with a pointed tip, historically used for hunting and combat by various cultures around the world.

Scraper

A tool, typically with a sharp edge, used to remove unwanted matter from surfaces.

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A diverse group of fishes characterized by fins supported by long, bony rods arranged in a ray pattern.