Which of the Following Statements Is CORRECT

question 92

Multiple Choice

Which of the following statements is CORRECT?

• A) All else equal, an increase in interest rates will have a greater effect on the prices of short-term than long-term bonds.
• B) All else equal, an increase in interest rates will have a greater effect on higher-coupon bonds than it will have on lower-coupon bonds.
• C) If a bond's yield to maturity exceeds its coupon rate, the bond's price must be less than its maturity value.
• D) If a bond's yield to maturity exceeds its coupon rate, the bond's current yield must be less than its coupon rate.
• E) If two bonds have the same maturity, the same yield to maturity, and the same level of risk, the bonds should sell for the same price regardless of the bond's coupon rates.

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Definitions:

Cold

A viral infectious disease of the upper respiratory system, characterized by a running nose, sore throat, cough, and sneezing.

Conifers

A class of cone-bearing seed plants, mostly evergreens, that includes pines, spruces, and firs, characterized by needles or scale-like leaves.

Spruce

A type of evergreen coniferous tree belonging to the genus Picea, known for its needle-like leaves and wood used in various applications.

Fir

A type of evergreen tree that belongs to the family Pinaceae, known for its conical shape and needle-like leaves.