Bond value, yield to maturity, coupon rate, current yield
Which of the following statements is the most correct and why?
A.If a bond sells for less than par, then its yield to maturity is less than its coupon rate.
B. If a bonds sell at par, then its current yield will be less than yield to maturity.
C. Assuming that both are held to maturity and are equal risk, a bond selling for more than par with ten yrs to maturity will have a lower current yield and higher capital gain relative to bond that sells at par.
D.Anwers are A and C
E. None of the anwers above
Solution Preview
Which of the following statements is the most correct and why?
A .If a bond sells for less than par, then its yield to maturity is less than its coupon rate.
B. If a bonds sell at par, then its current yield will be less than yield to maturity.
C. Assuming that both are held to maturity and are equal risk, a bond selling for more than par with ten yrs to maturity will have a lower current yield and higher capital gain relative to bond that sells at par.
D. Answers are A and C ...
Solution Summary
A multiple choice question on bon values has been answered.
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