Multiple Choice
A bond that you held to maturity had a realized return of 8%, but when you bought it, it had an expected return of 6%. If no default occurred, which one of the following must be true?
A) The bond was purchased at a premium to par.
B) The coupon rate was 8%.
C) The required return was greater than 6%.
D) The coupons were reinvested at a higher rate than expected.
E) The bond must have been a zero coupon bond.
Correct Answer:
Verified
Correct Answer:
Verified
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