Which of the following statements is CORRECT? If a bond is selling at a discount
ID: 1233031 • Letter: W
Question
Which of the following statements is CORRECT?If a bond is selling at a discount, the yield to call is a better measure of return than the yield to maturity.
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.
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.
If a coupon bond is selling at par, its current yield equals its yield to maturity.
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.
Explanation / Answer
If a coupon bond is selling at par, its current yield equals its yield to maturity. see this link http://en.wikipedia.org/wiki/Yield_to_maturity
Related Questions
Hire Me For All Your Tutoring Needs
Integrity-first tutoring: clear explanations, guidance, and feedback.
Drop an Email at
drjack9650@gmail.com
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.