Which of the Following Statements Regarding Bond Current Yields Is

question 59

Multiple Choice

Which of the following statements regarding bond current yields is NOT true?

• A)If a bond is selling at a discount to par, then its current yield will be less than its yield to maturity.
• B)If a bond is selling at its par value, then its current yield equals its yield to maturity.
• C)If a bond is selling at a premium, then its current yield will be greater than its yield to maturity.
• D)A bond's current yield will remain unchanged as the bond's term to maturity changes.

---

Definitions:

Privity of Contract

A legal concept stating that only the parties to a contract have the right to sue each other to enforce the terms of that contract.

Supreme Court Decision

A ruling issued by the Supreme Court, which is the highest court in many countries, setting a legal precedent.

Trust

A provision in equity whereby one person transfers property to a second person obligated to use it to the benefit of a third person.

Involuntary Assignment

Assignment of rights that takes place involuntarily, as in the cases of death and bankruptcy.