A 6 percent, annual coupon bond is currently selling at a premium and matures in 7 years

You expect interest rates to decline in the near future even though the bond market is not indicating any sign of this change. Which one of the following bonds should you purchase now to maximize your gains if the rate decline does occur?    A.  short-term; low coupon B.  short-term; high coupon C.  long-term; zero coupon D.  long-term; low coupon E.  long-term; high coupon Refer to section 7.1

48.

A 6 percent, annual coupon bond is currently selling at a premium and matures in 7 years. The bond was originally issued 3 years ago at par. Which one of the following statements is accurate in respect to this bond today?    A.  The face value of the bond today is greater than it was when the bond was issued. B.  The bond is worth less today than when it was issued. C.  The yield-to-maturity is less than the coupon rate. D.  The coupon rate is greater than the current yield. E.  The yield-to-maturity equals the current yield. Refer to section 7.1

49.

Which of the following statements concerning bonds are correct? I. Bonds provide tax benefits to issuers. II. The risk of a firm financially failing increases when the firm issues bonds. III. Most long-term bond issues are referred to as unfunded debt. IV. All bonds are treated equally in a bankruptcy proceeding.    A.  II and III only B.  I and II only C.  III and IV only D.  II and IV only E.  I, II, and III only Refer to section 7.2