Question 12.

Which of the following statements is CORRECT?

A. If interest rates increase, the price of a 10-year coupon bond will decline by a greater percentage than the price of a 10-year zero coupon bond.

B. If a bond's yield to maturity exceeds its annual coupon, then the bond will trade at a premium.

C. If a coupon bond is selling at par, its current yield equals its yield to maturity.

D. If a coupon bond is selling at a discount, its price will continue to decline until it reaches its par value at maturity.

E. If a coupon bond is selling at a premium, its current yield equals its yield to maturity.