A Bond's Price and Its Yield to Maturity Are Inversely

question 22

Multiple Choice

A bond's price and its yield to maturity are inversely related because

• A)discounting future payments at a higher rate reduces the present value of the payments.
• B)discounting future payments at a higher rate increases the present value of the payments.
• C)an increase in the yield to maturity will lower a bond's coupon rate and hence its price.
• D)a fall in a bond's price will lower its par value and hence its yield to maturity.

---

Definitions:

Plasma Membrane

The lipid bilayer that encloses the cytoplasm of a cell, regulating the passage of substances in and out of the cell.

Cytoplasm

The jelly-like substance within a cell enclosed by the cell membrane, excluding the nucleus, containing organelles and the site of most cellular activities.

Lactate

A compound produced in the body during the anaerobic conversion of glucose to energy, often associated with muscle fatigue.

NAD+

Nicotinamide adenine dinucleotide, a coenzyme found in all living cells that is involved in redox reactions, carrying electrons from one reaction to another.