If a Bond Is Selling at Par Value, Which of the Following

question 105

Multiple Choice

If a bond is selling at par value, which of the following statements is correct?

• A)The current yield must equal the coupon rate.
• B)The current yield must equal the yield to maturity.
• C)Both of these statements are correct.
• D)None of these statements is correct.

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Definitions:

Rational Model

A decision-making model based on logically analyzing all alternatives and choosing the most optimal solution based on predetermined criteria.

Managerial Decision Making

The process by which managers select among available options to make choices that will benefit their organization.

Time Constraints

The limitations on the amount of time available to complete a task or project.

Rational Model

A decision-making approach that assumes individuals make decisions based on complete information, weighing all alternatives to choose the most satisfactory option.