QUESTTUN TO Which of the following is most CORRECT? The price of an existing bond moves in the same direction as interest rates (i.e. if interest rates rise, bond . prices also rise). OB. Zero coupon bonds pay no annual interest and are issued at a premium to their par value. C. If current interest rates are below the fixed coupon rate of a bond, that bond will sell at a premium. If a corporation's bonds are selling at a discount, then the YTC is probably the expected return for the OD. investor. A fixed-rate bond will sell at a premium when its coupon interest rate is equal to the going rate of interest, O E. kd- QUESTION 17 Which of the following is most CORRECT? O A. Deficits, whether federal or trade, tend to push interest rates higher. OB. The difference between EVA and Net Income is the cost of the firm's debt. If you wanted a capital gain, you would want to buy bonds now if you thought the bond coupon rates OC. were going to go up in the future. "Equity Value Added is the measurement of the difference between the market value of the firm's equity today and the amount of OD. equity capital that has been supplied by investors. OE When we are expecting a recession, the Federal Reserve is more likely to increase short-term interest rates than to decrease them