Which of the Following Statements Is CORRECT

question 77

Multiple Choice

Which of the following statements is CORRECT?

• A) If a 10-year, $1, 000 par, 10% coupon bond were issued at par, and if interest rates then dropped to the point where rd = YTM = 5%, we could be sure that the bond would sell at a premium above its $1, 000 par value.
• B) Other things held constant, a corporation would rather issue noncallable bonds than callable bonds.
• C) Other things held constant, a callable bond would have a lower required rate of return than a noncallable bond.
• D) Reinvestment rate risk is worse from an investor's standpoint than interest rate price risk if the investor has a short investment time horizon.
• E) If a 10-year, $1, 000 par, zero coupon bond were issued at a price that gave investors a 10% yield to maturity, and if interest rates then dropped to the point where rd = YTM = 5%, the bond would sell at a premium over its $1, 000 par value.

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Definitions:

Christian Church

A religious institution centered on the teachings of Jesus Christ and the Bible, spanning various denominations worldwide, with significant influence on culture, politics, and society.

Vestibule Area

An entrance or a lobby area outside the main part of a building, serving as an antechamber or a waiting area.

Narthex

An architectural space, typically at the western entrance of a church, serving as a vestibule or antechamber to the nave.

Santa Costanza

An ancient church in Rome, Italy, noted for its central plan and early Christian mosaics, originally built as a mausoleum for Constantina, the daughter of the Roman Emperor Constantine.