Which Statement Regarding Bond Prices Is True

question 126

Multiple Choice

Which statement regarding bond prices is true?

• A)If a coupon bond is selling at par, its current yield equals its yield to maturity.
• B)If a coupon bond is selling at a discount, its price will continue to decline until it reaches its par value at maturity.
• C)If interest rates increase, the price of a 10-year coupon bond will decline by a greater percentage than the price of a 10-year zero coupon bond.
• D)If a bond's yield to maturity exceeds its annual coupon, then the bond will trade at a premium.

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Definitions:

Financial Statements

Structured representations of the financial performance and financial position of an entity, providing detailed information about its income, expenses, assets, liabilities, and equity.

Independent Evaluation

An assessment conducted by a party outside of the project or program team to ensure objectivity and impartiality.

Material

In financial and accounting contexts, refers to information or an item that could influence the decision-making process of users of financial statements.

Omission

An oversight or failure to include something, often resulting in an incomplete set of information or accounting records.