Which Statement Regarding Bond Yields Is True

question 104

Multiple Choice

Which statement regarding bond yields is true?

• A)The yield to maturity for a coupon bond that sells at a premium consists entirely of a positive capital gains yield; it has a zero current interest yield.
• B)The market value of a bond will always approach its par value as its maturity date approaches. This holds true even if the firm has filed for bankruptcy.
• C)Rising inflation makes the actual yield to maturity on a bond greater than a quoted yield to maturity that is based on market prices.
• D)The yield to maturity on a coupon bond that sells at its par value consists entirely of a current interest yield; it has a zero expected capital gains yield.

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Definitions:

Endorphins

Peptides produced by the central nervous system and the pituitary gland, known for their ability to act as natural painkillers.

Heroin

An opioid drug made from morphine, a natural substance taken from the seed pod of various opium poppy plants.

Neurons

Electrically excitable cells that communicate with other cells via specialized connections called synapses, functioning as the basic working unit of the brain.

Hippocampus

A region of the brain crucial for learning and memory, located within the temporal lobes.