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Question
William Corp. bonds have a current yield of 7% and mature in 10 years. Smith Corp. bonds have a current yield of 5% and mature in 10 years. Given this information, which of the following statements is MOST correct?A) William Corp. bonds will have a higher yield to maturity than Smith Corp. bonds.
B) Smith Corp. bonds will sell for a lower price than William Corp. bonds.
C) Smith Corp. bonds are riskier than William Corp. bonds.
D) If both bonds have the same yield to maturity, then the price of Smith Corp. bonds must be less than the price of William Corp. bonds.
Answer
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