A Bond Is Currently Trading Below Par

question 86

Multiple Choice

A bond is currently trading below par. Which of the following must be true about that bond?

• A)The bond's yield to maturity is less than its coupon rate.
• B)The bond is a zero-coupon bond.
• C)The bond's yield to maturity is greater than its coupon rate.
• D)B and C above

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Definitions:

Reduced By

A term indicating that a quantity is decreased or diminished by a certain amount or percentage.

Revenue

The total income generated by a business from its operational activities.

Sale

A transaction between two parties where the buyer acquires an asset from the seller for a specified amount of money.

Hammers

A tool typically used for driving nails into, or pulling them from, some other object. Generally, it involves a handle and a head.