abc corporation has bonds outstanding that mature in 6 years, have a YTM of 4%, face value of $1000 and a coupon rate of 5%. XYZ corporation has bonds outstanding that also mature in 6 years, have a YTM of 4%, and face value of $1000, but the coupon rate is 0. Which of the following statements is true?

a. ABC corp bonds have more interest risk that XYZ corp bonds because the coupon rate is higher.

b. XYZ corp bonds are trading at face value.

C. ABC corp bonds are trading at face value.

d. XYZ corp bonds have a capital gains yield of 4%

e. ABC corp bonds have a capital gains yield of 4%

2. Which of the following statements is false about bonds?

a. Discount bonds have a coupon rate that is lower than the required return.

b. All else equal, a callable bond will have slightly lower value than a bond that does not have a call provision.

c. Convertible bonds can be converted to cash.

d. Premium bonds decrease in value over time.

e. All of the above are true

3. Which of the following statements about stocks are true?

a. Future stock prices are difficult to predict, but dividends are fairly easy to predict for companies that pay dividends.

b. The dividend yield is always constant.

c. The capital gains yields is always equal to growth rate in dividends.

d. The capital gains yield is the name of the income component of stock returns.

e. All of the above statements are true.