Two Bonds Are Identical Except for Their Maturity

question 42

Multiple Choice

Two bonds are identical except for their maturity.The bonds have a coupon rate that is greater than their yield to maturity.Which of the following is true when comparing the two bonds?

• A) The longer maturity bond has a greater premium (is priced farther above par).
• B) The longer maturity bond has a smaller premium (is priced above par but closer to par).
• C) The longer maturity bond has a greater discount (is priced farther below par).
• D) The longer maturity bond has a smaller discount (is priced below par but closer to par).

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Definitions:

Cell Cycle

The series of phases that a cell goes through from its formation to its division into two daughter cells.

Plant Cells

The basic structural and functional units of plants, distinguished by their rigid cell walls, chloroplasts, and large central vacuoles.

Animal Cells

Basic units of life in organisms of the kingdom Animalia, characterized by lacking cell walls and having a nucleus and other specialized organelles.

Sister Chromatids

Identical copies of a chromosome that are connected by a centromere and eventually separated during cell division.