Which of the following statements is incorrect? a. If the coupon rate of a bond

Question

Which of the following statements is incorrect? a. If the coupon rate of a bond s equal to the nvestor's required rate of return, the present value of the bond should be equal to the par value. O b. If the coupon rate of a bond is above the investor's required rate of return, the present value of the bond O c. If the coupon rate of a bond is below the investor's required rate of return, the present value of the bond O d. If the coupon rate of a bond is below the investor's required rate of return, the present value of the bond should be above the par value. should be above the par value. should be below the par value. e. All of these statements are correct.

Explanation / Answer

The incorrect statement is c. If the coupon rate of a bond is below the investors required rate of return, the present value of the bond should be above the par value

The incorrect statement is if the coupon rate of a bond is below the investors required rate of return, the present value of the bond should be below the par value.

Relationship between the coupon rate of a bond and the investors required rate of return is-

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