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2. The bond is selling below its par value.
3. The bond is selling at a discount.
4. If the yield to maturity remains constant, the bond's price one year
from now will be lower than its current price.
5. The bond's current yield is greater than 9%.
29. A 10-year corporate bond has an annual coupon of 9%. The bond is
currently selling at par ($1,000). Which of the following statements is
CORRECT?
a. The bond s expected capital gains yield is zero.
b. The bond s yield to maturity is above 9%.
c. The bond s current yield is above 9%.
d. If the bond s yield to maturity declines, the bond will sell at a
discount.
e. The bond s current yield is less than its expected capital gains yield.
30. If the Federal Reserve unexpectedly announces that it expects
inflation to increase, then we would probably observe an immediate
increase in bond prices.
The total yield on a bond is derived from dividends plus changes in the
price of the bond.
Bonds are riskier than common stocks and therefore have higher
required returns.
Bonds issued by larger companies always have lower yields to maturity
(less risk) than bonds issued by smaller companies.