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Which of the Following Statements Is Correct

Question 93

Multiple Choice

Which of the following statements is correct?


A) If a 10-year, $1,000 par value bond is issued at a coupon rate of 10 percent and if its market yield is 5 percent, the issuer will purchase bonds in the financial markets because their prices will be less than the par value.
B) If a 10-year, $1,000 par value bond is issued at a coupon rate of 10 percent and if its market yield is 5 percent, the bond's maturity value would be more than its par value.
C) If a 10-year, $1,000 par value bond is issued at a coupon rate of 10 percent and if its market yield is 5 percent, the bond will mature in 15 years and not in 10 years.
D) If a 10-year, $1,000 par value bond is issued at a coupon rate of 10 percent and if its market yield is 5 percent, the bond will sell at a premium.
E) If a 10-year, $1,000 par value bond is issued at a coupon rate of 10 percent and if its market yield is 5 percent, the bond's coupon rate would decrease from 10 percent to 5 percent.

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