Multiple Choice
Five years ago Rogue Construction Inc.issued 20-year maturity fixed-rate bonds at par with a 10% coupon rate.Today those same bonds carry a 14% yield to maturity.Which of the following statements about this bond issue could be true?
A) Since issue,the economy-wide rate of inflation has increased.
B) The market believes there is greater risk associated with this bond than at the issue date.
C) Both A and B may be true.
D) Neither A nor B could be true.
Correct Answer:
Verified
Correct Answer:
Verified
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