A Bond Is Currently Trading Below Par

question 3

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 or C above

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Definitions:

Vicariously

Experiencing something through the actions or experiences of another person, rather than firsthand.

Reinforcing Outcomes

Consequences that increase the probability of a behavior being repeated by providing a reward or removing a negative stimulus.

Admirable

Deserving respect or approval for qualities such as integrity, bravery, or skill.

Observational Learning

A process of learning that occurs through observing the behavior of others, modeling that behavior, and then imitating it.