Finance

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Which of the following statments is CORRECT?

a. Assume that two bonds have equal maturities and are of equal risk, but one bond sells at par while the other sells at a premium above par. The premium bond must have a lower current yeild and a higher capital gains yield than the par bond.

b. A bond's current yield must always be either equal to its yield to maturity or between its yield to maturity and its coupon rate.

c. If a bond sells at par, then its current yield wii be less than its yield to maturity.

d. If a bond sell for less than par, then its yield to maturity is less than its coupon rate.

e. A discount bond's price declines each year until it matures, when its vaule equals its par value.

  • Finance -

    a. Assume that two bonds have equal maturities and are of equal risk, but one bond sells at par while the other sells at a premium above par. The premium bond must have a lower current yeild and a higher capital gains yield than the par bond.

    b. A bond's current yield must always be either equal to its yield to maturity or between its yield to maturity and its coupon rate.

    c. If a bond sells at par, then its current yield wii be less than its yield to maturity.

    d. If a bond sell for less than par, then its yield to maturity is less than its coupon rate.

    e. A discount bond's price declines each year until it matures, when its vaule equals its par value.

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