16. Which of the following statements is INCORRECT?

a.	One thing that is true for both bonds and stocks is the capital gains yield (CGY) will be positive if the price at the end of the year (P1) is higher than the price at the beginning of the year (P0)
b.	The annual return of a stock is equal to its dividend yield (DY) plus the capital gains yield (CGY)
c.	If a bond sells at a discount, then the capital gains yield (CGY) of a bond will be positive
d.	If a bond sells at a premium, then the current yield (CY) of a bond will be lower than the Yield to Maturity (YTM)
e.	The annual return of a bond, also known as its Yield to Maturity, is equal to its coupon rate if the bond sells at par

____ 17. Which of the following situations are likely to DECREASE a bonds yield to maturity?

1. Market interest rates increase

2. Prices on bonds increase

3. The company takes on riskier projects

4. Demand for the companys products increases

a.	Situations 2 and 4
b.	Situations 1 and 3
c.	Situations 1, 3 and 4
d.	None of the above
e.	All of the above

____ 18. 10-year Global Government Bonds had the following yields as of November 6, 2020. (Source: Tullet Prebon on wsj.com)

Country	Coupon (%)	Yield to Maturity (%)
Australia	1.000	0.768
China	2.680	3.216
France	0	-0.349
Germany	0	-0.616
Italy	0.900	-0.404
Japan	0.100	0.022
Spain	1.250	0.103
U.K.	4.750	0.277
U.S.	0.625	0.815

Which of the bonds above will sell at a discount?

a.	None
b.	France, Germany, and Italy bonds
c.	China and US bonds
d.	All except France and Spain bonds
e.	All except China and US bonds

Bonds - November 2020

Below is information about various bonds as of November 6, 2020, retrieved from www.schwab.com. The par value of the bonds is $1,000.

Issuer Name	Coupon	Years to Maturity	Price	Yield to Maturity (%)	Semi- annual?
Clorox	1.80%	19.50	$1,099.54		Yes
Ford	4.05%	5.13		4.150%	Yes

Use the information above to complete the table below. Then answer the 7 questions that follow.

Issuer	Price	Annual Coupon	YTM (%)	CY (%)	CGY (%)
Clorox
Ford

Note: YTM = Yield to Maturity; CY = Current Yield; CGY = Capital Gains Yield