A 10-year corporate bond has an annual coupon payment of 9 percent. The bond is currently selling at par ($1,000)....

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A 10-year corporate bond has an annual coupon payment of 9 percent. The bond is currently selling at par ($1,000). Which of the following statements is correct?

 

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    A. a. The bond's yield to maturity is 9 percent.
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    B. b. The bond's current yield is 9 percent.
  • C. c. If the bond's yield to maturity remains constant, the bond's price will remain at par.
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    D. d. Both answers a and c are correct.

    Which of the following statements is correct?
    • A. a. Retiring bonds under a sinking fund provision is similar to calling bonds under a call provision in the sense that bonds are repurchased by the issuer prior to maturity.
    • B. b. Under a sinking fund, bonds will be purchased on the open market by the issuer when the bonds are selling at a premium and bonds will be called in for redemption when the bonds are selling at a discount.
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      C. c. The sinking fund provision makes a debt issue less risky to the investor.
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      D. d. Both statements a and c are correct.
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      E. e. All of the statements above are correct.
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    E. e. All of the answers above are correct.
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