Question
Which of the following statement(s) are FALSE for a bond? (can be more than one) A. Zero coupon bond is always sold at discount. B.
Which of the following statement(s) are FALSE for a bond? (can be more than one)
A. | Zero coupon bond is always sold at discount. | |
B. | When the price of a bond decreases suddenly, its yield to maturity increases. | |
C. | 2-year zero coupon Treasury bond has lower interest rate risk compared to a 5-year zero coupon Treasury bond. | |
D. | When interest rate increases, all bond prices will go down. Therefore, the interest rate risk is the same for all bonds. | |
E. | A 10-year zero coupon Treasury bond has higher interest rate risk compared to a 10-year Treasury bond with a coupon rate of 6%. | |
F. | Bond price is just the face value of a bond; it is changing throughout the term of the bond. | |
G. | When the yield to maturity of a bond is higher than the coupon rate of the bond, the bond is sold at premium. |
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