13. Which of the following statements about bonds is NOT correct?

A. The total return on a bond during a given year is based only on the coupon interest payments received.

B. For a given firm, its debentures are likely to have a higher yield to maturity than its mortgage bonds.

C. All else equal, a bond that has a coupon rate of 8% will sell at a discount if the required return for bonds of similar risk is 10%.

D. The price of a discount bond will increase over time, assuming that the bonds yield to maturity remains constant.

27. You are analyzing the value of an investment by calculating the present value of its expected cash flows. Which of the following would cause the investment to look better, i.e. have a higher PV?

A. The discount rate falls.

B. The riskiness of the projects cash flows increases.

C. The discount rate rises.

D. The cash flows are extended over a longer period of time, but the total amount of the cash flows remains the same.