Which of the Following Are True for a Coupon Bond

question 62

Multiple Choice

Which of the following are true for a coupon bond?

• A) When the coupon bond is priced at its face value, the yield to maturity equals the coupon rate.
• B) The price of a coupon bond and the yield to maturity are positively related.
• C) The yield to maturity is greater than the coupon rate when the bond price is above the par value.
• D) All of the above are true.
• E) Only A and B of the above are true.

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Definitions:

High Dividend Policy

A strategy employed by companies to distribute a significant portion of earnings to shareholders in the form of dividends.

Dislike of Uncertainty

A preference for predictable environments and a tendency to avoid situations with uncertain outcomes.

High Dividend Policy

A financial strategy where a company decides to pay out a high proportion of its earnings in the form of dividends to its shareholders.