Question

Which of the following statements is CORRECT? If a bond's yield to maturity exceeds its coupon rate, the bond will sell at par. All else equal, if a bond's yield to maturity increases, its price will fall. If a bond's yield to maturity exceeds its coupon rate, the bond will sell at a premium over par. All else equal, if a bond's yield to maturity increases, its current yield will fall. A zero coupon bond's current yield is equal to its yield to maturity.

Answer 1

Answer:

All else equal, if a bond's yield to maturity increases, its price will fall

Explanation:

Bond valuation is a system for arranging the theoretical fair value of a distinct bond. The current value of the bond's future interest payments is also included in the bond valuation. This is known as cash flow. While the value of the bond upon maturity is known as the face value of the bond. Bond valuation helps the investor to conclude upon the rate of return which is required for the investment of the bond as the par value of the bond and the interest payments are fixed.