Which of the Following Statements Is CORRECT

question 53

Multiple Choice

Which of the following statements is CORRECT?

• A) All else equal, an increase in interest rates will have a greater effect on the prices of short-term than long-term bonds.
• B) All else equal, an increase in interest rates will have a greater effect on higher-coupon bonds than it will have on lower-coupon bonds.
• C) If a bond's yield to maturity exceeds its coupon rate, the bond's price must be less than its maturity value.
• D) If a bond's yield to maturity exceeds its coupon rate, the bond's current yield must be less than its coupon rate.
• E) If two bonds have the same maturity, the same yield to maturity, and the same level of risk, the bonds should sell for the same price regardless of the bond's coupon rates.

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Definitions:

Exorcism

A religious or spiritual practice of evicting demons or other spiritual entities from a person or place believed to be possessed.

Electroconvulsive Therapy

A psychiatric treatment in which seizures are electrically induced in patients to provide relief from mental disorders.

Severe Depression

A more intense form of depression characterized by persistent feelings of sadness, hopelessness, and worthlessness that don’t go away on their own.

Traditional Drug Therapy

The use of prescription medications to treat or manage health conditions in accordance with established medical practices.