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

Coupon bonds do not always trade for a discount. In fact, they can trade at a premium if the coupon rate is higher than the prevailing market interest rate. Therefore, statement C is FALSE. The other statements are true: A) buying a bond at a discount means the investor will earn a return from both coupons and the bond's eventual maturity value; B) issuers often set coupon rates to achieve par value; D) changes in market rates impact a bond's yield and price.

Which of the Following Statements Is FALSE