A 10-year corporate bond has an annual coupon of 9%. The bond is currently selling at par ($1,000). Which of the following statements is CORRECT? Group of answer choices The bond's yield to maturity is above 9%. The bond's current yield is less than its expected capital gains yield. If the bond's yield to maturity declines, the bond will sell at a discount. The bond's current yield is above 9%. The bond's expected capital gains yield is zero.

The bond's expected capital gains yield is zero.

Explanation:

When the fixed coupon rate of a bonds differs from the market rate, the market price changes to adjust the yield to market rate.

The bond's yield to maturity is above 9%.

The bond's current yield is above 9%

FALSE as it is at par is neither above or below

If the bond's yield to maturity declines, the bond will sell at a discount.

FALSE

As rate is determinated as return/price = rate

to decrease rate given the coupon rate is fixed the price should increase not decrease.

The bond's current yield is less than its expected capital gains yield.

The bond's expected capital gains yield is zero.

The capital gains are the difference in price of the bonds

As this bond is being sale at par there are no variation thus, zero capital gains.

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