1. Which of the following will increase if the coupon rate increases?

I. face value

II. market value

III. yield-to-maturity

IV. current yield

A. I and II only

B. III and IV only

C. I, II, and III only

D. II, III, and IV only

E. I, II, III, and IV

2. Which one of the following statements is correct concerning discount bonds?

A. The current yield is less than the yield to maturity.

B. The bonds will be redeemed at maturity for less than face value.

C. The coupon rate is greater than the current yield.

D. The clean price is greater than the dirty price.

E. Only zero-coupon bonds sell at a discount.

3. Assuming there is no default risk, both a premium bond and a discount bond must share which one of the following characteristics?

A. market price less than a par value bond

B. yield-to-maturity less than the coupon rate

C. maturity value equal to a par value bond

D. current yield equal to that of a par value bond

E. coupon rate exceeding the yield-to-maturity

4. For a premium bond, the:

A. current yield is equal to the coupon rate but less than the yield to maturity.

B. yield to maturity exceeds both the coupon rate and the current yield.

C. coupon rate is equal to the yield to maturity but less than the current yield.

D. current yield is less than either the coupon rate or the yield to maturity.

E. coupon rate exceeds both the yield to maturity and the current yield.