Which of the Following Statements Is CORRECT

question 41

Multiple Choice

Which of the following statements is CORRECT?

• A) 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 r_d = YTM = 5%,the bond would sell at a premium over its $1,000 par value.
• B) If a 10-year,$1,000 par,10% coupon bond were issued at par,and if interest rates then dropped to the point where r_d = YTM = 5%,we could be sure that the bond would sell at a premium above its $1,000 par value.
• C) Other things held constant,including the coupon rate,a corporation would rather issue noncallable bonds than callable bonds.
• D) Other things held constant,a callable bond would have a lower required rate of return than a noncallable bond because it would have a shorter expected life.
• E) Bonds are exposed to both reinvestment risk and price risk.Longer-term low-coupon bonds,relative to shorter-term high-coupon bonds,are generally more exposed to reinvestment risk than price risk.

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Definitions:

Thalamus

A brain structure that acts as a relay station for sensory and motor signals to the cerebral cortex.

Cortex

The outer layer of the cerebrum in the brain, involved in many complex brain functions such as memory, attention, perceptual awareness, and language.

Appropriate Response

A reaction or behavior that is considered suitable or proper in a given context or situation.

Amygdala

A part of the brain's limbic system implicated in emotion regulation, emotional memory, and responses to fear and stress.