Which one of the following statements is true? The current yield on a par value bond...

Which one of the following statements is true?

The current yield on a par value bond will exceed the bond's yield to maturity.

A premium bond has a current yield that exceeds the bond's coupon rate.

The yield to maturity on a premium bond exceeds the bond's coupon rate.

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

The current yield on a premium bond is equal to the bond's coupon rate.

Solutions

Expert Solution

A discount bond is a type of bond in which the coupon rate is less than the bond yield.

Therefore, the "option-(D) A discount bond has a coupon rate that is less than the bond's yield to maturity" is correct.

jeff jeffy answered 2 years ago

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