Question
Which of the following statements is CORRECT? a.If two bonds have the same maturity, the same yield to maturity, and the same level of risk,
Which of the following statements is CORRECT?
a.If two bonds have the same maturity, the same yield to maturity, and the same level of risk, the bonds should sell for the same price regardless of the bond's coupon rate.
b.If a bond's yield to maturity exceeds its coupon rate, the bond's price must be less than its maturity value.
c.All else equal, an increase in interest rates will have a greater effect on the prices of short-term bonds than it will on the prices of long-term bonds.
d.All else equal, an increase in interest rates will have a greater effect on higher-coupon bonds than it will have on lower-coupon bonds.
e.If a bond's yield to maturity exceeds its coupon rate, it would be considered a premium bond.
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