Which One of the Following Statements Is True of a Bond's

question 74

Multiple Choice

Which one of the following statements is true of a bond's yield to maturity?

• A) The yield to maturity of a bond is the discount rate that makes the present value of the coupon and principal payments equal to the price of the bond.
• B) It is the annual yield that the investor earns if the bond is held to maturity, and all the coupon and principal payments are made as promised.
• C) A bond's yield to maturity changes daily as interest rates increase or decrease.
• D) All of the above are true.

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Definitions:

Economies Of Scale

Cost advantages that enterprises obtain due to their scale of operation, leading to cost per unit of output decreasing with increasing scale.

ATC

ATC, or Average Total Cost, is the total cost divided by the number of goods produced, reflecting the average cost of production per unit.

Economic Profit

The earnings excess over the summation of a firm's clear and hidden financial outlays, showcasing its comprehensive income versus expenses.

Perfect Price Discrimination

Perfect price discrimination occurs when a seller charges each buyer their maximum willingness to pay, capturing the entire consumer surplus as profit.