two investors are considering the purchase of Corportation XYZ bonds. the bonds
ID: 2701032 • Letter: T
Question
two investors are considering the purchase of Corportation XYZ bonds. the bonds are selling at a price of $1100 each. investor A decides to buy the bonds and investor B does not buy the bonds.
A) Investor A must have a required return lower than the required return of Investor B
B) The yield to maturity for Investor A must be higher than the yield to maturity for Investor B
C) The yield to maturity for Investor A must be less than the yield to maturity for Investor B
D) The yield to maturity for this bond must be higher than the coupon rate.
Explanation / Answer
A If investor A decides to buy the bonds he must have a required return below the yield to maturity; Investor B, on the other hand,must have a required return above the yield to maturity.
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