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30 August, 20:12

Which of the following statements is most correct? Select one: a. If a bond sells for less than par, then its yield to maturity is less than its coupon rate. b. If a bond sells at par, then its current yield will be less than its yield to maturity. c. Assuming that both bonds are held to maturity and are of equal risk, a bond selling for more than par with ten years to maturity will have a lower current yield and higher capital gain relative to a bond that sells at par. d. Answers a and c are correct. e. None of the answers above is correct.

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  1. 30 August, 20:42
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    Answer: "e. None of the answers above is correct."

    Explanation: 1) If a bond sells for less than par, its yield at maturity is greater than its coupon rate.

    2) If a bond sells at par, its current yield will be the same as its yield at maturity.

    3) A bond selling for more than par will always have a lower capital gain than a par bond.

    4) Both Incorrect.
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