Based only on the coupon interest payments received

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Reference no: EM13872022

Which of the following statements is CORRECT?

a. The total return on a bond during a given year is based only on the coupon interest payments received.

b. All else equal, a bond that has a coupon rate of 10% will sell at a discount if the required return for bonds of similar risk is 8%.

c. The price of a discount bond will increase over time, assuming that the bond’s yield to maturity remains constant.

d. For a given firm, its debentures are likely to have a lower yield to maturity than its mortgage bonds.

e. When large firms are in financial distress, they are almost always liquidated, whereas smaller firms are generally reorganized.

Reference no: EM13872022

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