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Which of the Following Statements Is Incorrect

Question 38

Multiple Choice

Which of the following statements is incorrect?


A) Generally, we evaluate yield to call based on the bond's first available call.
B) Generally, a callable bond trades at a value that reflects the higher of yield to call and yield to maturity.
C) If the call price of a bond is above its current market price, it is unlikely that the bond would be called back, so the bond will sell based on its yield to maturity rather than its yield to call.
D) If the call price of a bond is below its current market price, it is likely that the bond would be called back, so the bond will sell based on its yield to call rather than its yield to maturity.

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