5. The yield to maturity on a bond is ________.

A. below the coupon rate when the bond sells at a discount, and equal to the coupon rate when the bond sells at a premium.

B. the discount rate that will set the present value of the payments equal to the bond price.

C. based on the assumption that any payments received are reinvested at the coupon rate.

D. none of the above.

6. Ceteris paribus, the duration of a bond is negatively correlated with the bond's

A. time to maturity.

B. coupon rate.

C. yield to maturity.

D. B and C

7. Holding other factors constant, the interest-rate risk of a coupon bond is higher when the bond's:

A. term-to-maturity is higher.

B. coupon rate is higher.

C. yield to maturity is higher.

D. all of the above

8. Holding other factors constant, the interest-rate risk of a coupon bond is lower when the bond's:

A. term-to-maturity is lower.

B. coupon rate is higher.

C. yield to maturity is lower.

D. A and B. E.