Which of the Following Statements Is CORRECT

question 40

Multiple Choice

Which of the following statements is CORRECT?

• A) a bond's current yield must always be either equal to its yield to maturity or between its yield to maturity and its coupon rate.
• B) if a bond sells at par, then its current yield will be less than its yield to maturity.
• C) if a bond sells for less than par, then its yield to maturity is less than its coupon rate.
• D) a discount bond's price declines each year until it matures, when its value equals its par value.
• E) assume that two bonds have equal maturities and are of equal risk, but one bond sells at par while the other sells at a premium above par. the premium bond must have a lower current yield and a higher capital gains yield than the par bond.

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