Which of the Following Statements About Bond Yields Is True

question 51

Multiple Choice

Which of the following statements about bond yields is true?

• A)If a bond is selling at a discount, the yield to call is a better measure of return than the yield to maturity.
• B)On an expected yield basis, the expected capital gains yield will always be positive because an investor would not purchase a bond with an expected capital loss.
• C)If a coupon bond is selling at par, its current yield equals its yield to maturity.
• D)The current yield on Bond A exceeds the current yield on Bond B; therefore, Bond A must have a higher yield to maturity than Bond B.

Understand the concept of intrinsic value of options and calculate it in practical scenarios.

Calculate the value of investments based on differing growth rates and market conditions.

Distinguish between common and preferred stocks in terms of dividends, returns, and valuation.

Understand the growth models and determine the value of stocks with varying growth periods.

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Definitions:

Ingroup Bias

The tendency to favor members of one's own group over those of external groups in judgment and behavior.

Performance Boost

An improvement in performance, often due to certain interventions, motivations, or conditions.

Dual Process Approach

A cognitive theory that proposes there are two distinct systems in the mind, one intuitive and fast, and the other deliberative and slow, influencing decision making and reasoning.

Reflective Processes

Cognitive operations that involve deliberate, conscious thinking and evaluation, typically guiding decision-making and behavior based on reflection.