Which of the Following Statements Is CORRECT

question 9

Multiple Choice

Which of the following statements is CORRECT?

• A) 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 their coupon rates.
• B) All else equal,an increase in interest rates will have a greater effect on the prices of short-term than long-term bonds.
• C) 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.
• D) If a bond's yield to maturity exceeds its coupon rate,the bond's price must be less than its maturity value.
• E) If a bond's yield to maturity exceeds its coupon rate,the bond's current yield must be less than its coupon rate.

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Definitions:

Hardness

A measure of a mineral's resistance to scratching, which aids in identifying minerals in field and lab settings.

Ionic

Relating to or involving ions, which are atoms or molecules with a net electric charge due to the loss or gain of one or more electrons.

Covalent

referring to chemical bonds formed by the sharing of electron pairs between atoms.

Metallic

Having properties characteristic of metals, such as conductivity, malleability, and often a shiny appearance.