Question
Which of the following statements is CORRECT? a. Rising inflation makes the actual yield to maturity on a bond greater than a quoted yield to
Which of the following statements is CORRECT?
a. | Rising inflation makes the actual yield to maturity on a bond greater than a quoted yield to maturity that is based on market prices. | |
b. | The yield to maturity for a coupon bond that sells at a premium consists entirely of a positive capital gains yield; it has a zero current interest yield. | |
c. | The yield to maturity on a coupon bond that sells at its par value consists entirely of a current interest yield; it has a zero expected capital gains yield. | |
d. | The market value of a bond will always approach its par value as its maturity date approaches. This holds true even if the firm has filed for bankruptcy. | |
e. | On an expected yield basis, the expected capital gains yield will always be positive because an investor would not purchase a bond with an expected capital loss |
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