If Its Yield to Maturity Is Less Than Its Coupon

question 76

Multiple Choice

If its yield to maturity is less than its coupon rate, a bond will sell at a ____, and increases in market interest rates will ____.

• A) discount; decrease this discount.
• B) discount; increase this discount.
• C) premium; decrease this premium.
• D) premium; increase this premium.

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Definitions:

Units of Labor

Measurements used to quantify the work input by labor forces, often referring to hours worked or number of workers.

Diminishing Returns

A principle stating that if one input in the production of a commodity is increased while all other inputs are held fixed, a point will eventually be reached at which additions of the input yield progressively smaller, or diminishing, increases in output.

Marginal Product Curve

A graphical representation that shows how the addition of one more unit of a resource to production affects the output of a product.

Total Product Curve

A graphical representation showing how the total quantity of output varies with changes in the quantity of a single input while other inputs are held constant.