Which of the Following Statements Is CORRECT

question 68

Multiple Choice

Which of the following statements is CORRECT?

• A) on an expected yield basis, the expected capital gains yield will always be positive because an investor would not purchase a bond with an expected capital loss.
• B) on an expected yield basis, the expected current yield will always be positive because an investor would not purchase a bond that is not expected to pay any cash coupon interest.
• C) if a coupon bond is selling at par, its current yield equals its yield to maturity.
• D) the current yield on bond a exceeds the current yield on bond b; therefore, bond a must have a higher yield to maturity than bond b.
• E) if a bond is selling at a discount, the yield to call is a better measure of return than the yield to maturity.

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