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    Bond Yields, Interest Rates and Bond Prices

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    Which statement is most correct:

    a. if a bonds yield to maturity exceeds its annual coupon, then the bond will be trading at a premium
    b. if interest rates increase the relative b, price change of a 10 year coupon bond will be greater than the relative price change of a 10 year zero bond
    c. if a coupon bond is selling at par its current yield equal its yield to maturity.
    d. both a and c are correct
    e. none are correct

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    Solution Preview

    a.if a bonds yield to maturity exceeds its annual coupon, then the bond will be trading at a premium: This is not correct. If the bond investors are demanding a greater yield than the bond is providing at par value, they will pay less than par value (i.e., a discount) in order to achieve ...

    Solution Summary

    The solution explains what bond yield statement is correct.

    $2.19

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