30-year, zero coupon If a bond is selling at a discount, which of the following

Question

30-year, zero coupon If a bond is selling at a discount, which of the following statements is correct? The current yield must be greater than the coupon rate. The coupon rate must be greater than the yield to maturity. The bond must have a low bond rating. All of the statements are correct. Which statement is true? The less liquid assets a firm holds, the less likely it is that the firm will experience financial distress. The lower the liquidity ratios, the less liquidity risk a firm has. Liquid assets generate profits for the firm. Extremely high levels of liquidity guard against liquidity crises, but at the cost of lower returns on assets Which of the following statements is correct? Long-term bonds have more reinvestment rate risk than short-term bonds. Long-term bonds have more interest rate risk than short-term bonds. Short-term bonds with high coupons have high interest rate risk. A zero coupon bonds do not have interest rate risk. Under which conditions will an investor demand a larger return (yield) on a bond? The bond issue is upgraded from A to AA. The bond issue is downgraded from A to BBB. Interest rates decrease due to decline in inflation. None of these conditions will cause an increase in the bond's yield.

Explanation / Answer

B,A,A,D

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