Which of the following statements is CORRECT?
a. On an expected yield basis, the expected capital gains yield will always be positive because an investor would not purchase a bond with an expected capital loss.
b. On an expected yield basis, the expected current yield will always be positive because an investor would not purchase a bond that is not expected to pay any cash coupon interest.
c. If a coupon bond is selling at par, its current yield equals its yield to maturity.
d. The current yield on Bond A exceeds the current yield on Bond B; therefore, Bond A must have a higher yield to maturity than Bond B.
e. If a bond is selling at a discount, the yield to call is a better measure of return than the yield to maturity.
c
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Project LMK requires an initial outlay of $400,000 and has a profitability index of 1.5. The project is
expected to generate equal annual cash flows over the next twelve years. The required return for this project is 20%. What is project LMK's net present value? A) $150,000 B) $600,000 C) $80,000 D) $120,000
As inflation pushes interest rates up, the cost of carrying inventory rises
Indicate whether the statement is true or false