Which of the following statements is most correct? Select one: a. If a bond sells for less than par, then its yield to maturity
is less than its coupon rate. b. If a bond sells at par, then its current yield will be less than its yield to maturity. c. Assuming that both bonds are held to maturity and are of equal risk, a bond selling for more than par with ten years to maturity will have a lower current yield and higher capital gain relative to a bond that sells at par. d. Answers a and c are correct. e. None of the answers above is correct.
This conclusion can be reached just by analyzing the data provided. The weighted-average contribution margin ($6.50) cannot be higher than all of the individual contribution margins ($5 and $4). The actual weighted-average contribution margin is: