Which One of the Following Statements Is Correct Concerning Premium

question 48

Multiple Choice

Which one of the following statements is correct concerning premium bonds?

• A)The premium increases when interest rates increase.
• B)The coupon rate is less than the current yield.
• C)As the time to maturity decreases, the premium increases.
• D)The yield to maturity is less than the coupon rate.
• E)The par value exceeds the face value.

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Definitions:

Consistent Principle

A rule or standard that is applied uniformly and reliably over time or across situations, without contradictions.

Jointly Exhaustive

A set of options or propositions is considered jointly exhaustive when it covers all possible scenarios or outcomes, leaving no possibility unaddressed.

Mutually Exclusive

Describing two or more events or conditions that cannot occur or be true at the same time.

Consistent Principle

A concept or rule that remains uniform and unchanged across different contexts or situations, ensuring coherence and reliability in application.