Which of the following statements is most correct?
A) All else equal, a bond that has a coupon rate of 10 percent will sell at a discount if the required return for a bond of similar risk is 8 percent.
B) Debentures generally have a higher yield to maturity relative to mortgage bonds.
C) If there are two bonds with equal maturity and credit risk, the bond which is callable will have a higher yield to maturity than the bond which is noncallable.
D) Answers a and c are correct.
E) Answers b and c are correct.

Question

Quizplus · Accepted Answer

Debentures, being unsecured, typically have higher yields compared to secured mortgage bonds. Callable bonds usually offer higher yields to compensate investors for the risk of the bond being called before maturity.

Which of the Following Statements Is Most Correct