a. An investment in a coupon bond will provide the investor with a return equal to the bond’s yield to maturity at the time of purchase if: i. The bond is not called for redemption at a price that...

a. An investment in a coupon bond will provide the investor with a return equal to the bond’s yield to maturity at the time of purchase if:
i. The bond is not called for redemption at a price that exceeds its par value.
ii. All sinking fund payments are made in a prompt and timely fashion over the life of the issue.
iii. The reinvestment rate is the same as the bond’s yield to maturity and the bond is held until maturity.
iv. All of the above.
b. A bond with a call feature:
i. Is attractive because the immediate receipt of principal plus premium produces a high return.
ii. Is more apt to be called when interest rates are high because the interest savings will be greater.
iii. Will usually have a higher yield to maturity than a similar noncallable bond.
iv. None of the above.
c. In which one of the following cases is the bond selling at a discount?
i. Coupon rate is greater than current yield, which is greater than yield to maturity.
ii. Coupon rate, current yield, and yield to maturity are all the same.
iii. Coupon rate is less than current yield, which is less than yield to maturity.
iv. Coupon rate is less than current yield, which is greater than yield to maturity.
d. Consider a 5-year bond with a 10% coupon that has a present yield to maturity of 8%. If interest rates remain constant, one year from now the price of this bond will be:
i. Higher
ii. Lower
iii. The same
iv. Par