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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Definitions:

Huron

A confederation of Native American tribes originally located in the Great Lakes region, known for their agricultural society and involvement in the fur trade.

Iroquois

A historically powerful northeast Native American confederacy known for forming the Iroquois League, which brought together several tribes for strength and diplomacy.

Algonquin

Refers to a group of Native American peoples speaking Algonquian languages and originally living in the North Eastern region of North America.

Mercantilism

An economic theory and practice prevalent in Europe during the 16th to 18th centuries, centered on building a nation's wealth by maximizing exports and minimizing imports.