blairlain8152 blairlain8152

17-06-2020
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Which one of the following statements is true? Question 4 options: A) A premium bond has a current yield that exceeds the bond's coupon rate. B) The yield to maturity on a premium bond exceeds the bond's coupon rate. C) The current yield on a par value bond will exceed the bond's yield to maturity. D) The current yield on a premium bond is equal to the bond's coupon rate. E) A discount bond has a coupon rate that is less than the bond's yield to maturity.

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krupap11 krupap11

18-06-2020

Answer:

E)

A discount bond has a coupon rate that is less than the bond's yield to maturity.

Explanation:

Premium bonds: Coupon rate > Current yield > Yield to maturity

Discount bonds: Coupon rate < Current yield < Yield to maturity

Par value bonds: Coupon rate = Current yield = Yield to maturity

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