Which one of the following sentences is correct concerning fixed-income securities?
A)The coupon rate on a fixed-income security is equal to the current yield.
B)The price of a fixed-income security is inversely related to the current yield.
C)Fixed-income securities are default free.
D)Fixed-income securities tend to be more liquid than money market securities.
E)Fixed-income securities include all debt instruments issued by the U.S. government.

Question

Quizplus · Accepted Answer

The price of a fixed-income security is inversely related to the current yield. This means that as the current yield increases, the price of the security decreases, and vice versa. The other choices are incorrect: A) the current yield is not necessarily equal to the coupon rate, C) fixed-income securities can have varying levels of credit risk, D) money market securities are generally more liquid than fixed-income securities, and E) fixed-income securities include a wide variety of debt instruments, not just those issued by the U.S. government.

Which One of the Following Sentences Is Correct Concerning Fixed-Income