Which of the following statements is FALSE? A. Coupon rate is determined by the bond issuer....

Which of the following statements is FALSE?

	A.	Coupon rate is determined by the bond issuer.
	B.	When YTM changes over time, coupon rate and coupon payments remain the same.
	C.	Yield to Maturity (YTM) is set by market.
	D.	When a bond issuer’s default probability increases, its YTM decreases.

Solutions

Expert Solution

A.) True because it the isssuer's right

B)True because, coupon rate and payment are fixed and based on the issue structure at the time of the issue

C)True because, YTM is dependant on the price of the bond which is set by the market

D)False because, when the default probability increases the risk increases and to compensate the increased risk higher YTM will be demanded by market.

So ans is D option

jeff jeffy answered 2 years ago

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