Which of the following statements is the most accurate? 49. a. A bond's discount to maturity is smaller than the coupon rate if it buys for less than par. b. A bond's actual yield would be smaller than the yield to maturity if it sells at par. c. Assuming both bonds are kept to maturity and have the same risk, a bond selling at greater than par for a 10-year maturity would have a lower current yield and a higher capital gain than a bond selling at par. d. Both statements a and c are true. e. None of the above assertions are true.

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)
8th Edition
ISBN:9781285065137
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Eugene F. Brigham, Joel F. Houston
Chapter8: Risk And Rates Of Return
Section: Chapter Questions
Problem 9Q: In Chapter 7, we saw that if the market interest rate, rd, for a given bond increased, the price of...
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49

Which of the following statements is the most accurate? 49.
a. A bond's discount to maturity is smaller than the coupon rate if it buys for less than par.
b. A bond's actual yield would be smaller than the yield to maturity if it sells at par.
c. Assuming both bonds are kept to maturity and have the same risk, a bond selling at greater than par for a 10-year maturity would have a lower current yield and a higher capital gain than a bond selling at par.
d. Both statements a and c are true.
e. None of the above assertions are true.

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