Which of the following statements is correct? 

Select one:

A. Rising inflation causes a bond's actual yield to maturity to be higher than the quoted yield to maturity, which is based on market prices. 

b. The yield to maturity on a coupon bond sold at face value consists entirely of an interest yield; has an expected capital gains return of zero. 

C. Based on the expected return, the expected capital gains return will always be positive because an investor would not purchase a bond with an expected capital loss. 

d. The market value of a bond will always approach its face value as its maturity date approaches. This is true even if the company goes bankrupt. my. All the above statements are false.

Answer rating: 100% (QA)

The detailed answer for the above question is provided below The correct answer is A Rising infla... View the full answer