The U.S. Treasury's 20-year bond has a yield-to-maturity of 2.5%. In order for a 20-year bond of a corporation to have the same price as that of the Treasury it must pay the same coupon.

a. True
b. False

US Treasury bonds are considered risk free investments, so their price is not affected by market risk. On the other hand, a corporation's bond is not a risk free investment and its price is affected by market risk. The higher the risk, the higher the expected return and the lower the price of a security.

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The U.S. Treasury's 20-year bond has a yield-to-maturity of 2.5%. In order for a 20-year bond of a corporation to have the same price as that of the Treasury it must pay the same coupon. a. True b. False

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The U.S. Treasury's 20-year bond has a yield-to-maturity of 2.5%. In order for a 20-year bond of a corporation to have the same price as that of the Treasury it must pay the same coupon.

a. True
b. False