Which Statement Regarding Bond Yields Is True

question 36

Multiple Choice

Which statement regarding bond yields is true?

• A)A zero coupon bond's current yield is equal to its yield to maturity.
• B)If a bond's yield to maturity exceeds its coupon rate, the bond will sell at par.
• C)All else being equal, if a bond's yield to maturity increases, its price will fall.
• D)If a bond's yield to maturity exceeds its coupon rate, the bond will sell at a premium over par.

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Definitions:

Cash Flows

The total amount of money being transferred into and out of a business, especially affecting its liquidity.

Foreign Currency

Currency used in a country that is different from the one in which a company operates, affecting financial transactions and reporting.

Depreciates

Refers to the reduction in the value of an asset over time, typically due to wear and tear, obsolescence, or usage.

Foreign Exchange Risk

The potential loss from fluctuations in exchange rates affecting the value of investments in foreign currencies.