Which of the following statements is false?
A) If the bond trades at a discount, and investor who buys the bond will earn a return both from receiving the coupons and from receiving a face value that exceeds the price paid for the bond.
B) Most coupon bond issuers choose a coupon rate so that the bonds will initially trade at, or very near to, par.
C) Coupon bonds always trade for a discount.
D) At any point in time, changes in market interest rates affect a bond's yield to maturity and its price.

Question

Quizplus · Accepted Answer

Statement C is false. Coupon bonds do not always trade for a discount. Depending on the prevailing market interest rates and the creditworthiness of the issuer, a coupon bond may trade at a premium (above par) or at par, in addition to trading at a discount (below par). Statements A, B, and D are true.

Which of the Following Statements Is False