A Bond That Is Held to Maturity

question 20

Multiple Choice

A bond that is held to maturity

• A) will necessarily have a yield to maturity equal to the coupon rate.
• B) will necessarily earn the yield to maturity at the time of purchase.
• C) may earn more or less that its yield to maturity at the time of purchase because the rate at which coupons can be reinvested may change.
• D) will earn the yield to maturity at the date of maturity.

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Definitions:

Income Rises

An increase in the amount of money earned from work, investments, or other sources over a period of time.

Particular Good

A specific item or product that is distinguished by its unique characteristics and attributes, offering distinct benefits to the consumer.

Budget Constraint

The limitations on the consumption choices of an individual or family due to their income and the prices of goods and services.

Slope

Measures the steepness, incline, or grade of a straight line, calculated as the ratio of the vertical change to the horizontal change between two points on the line.