help on MCQ

Hello, I was wondering if anyone could help me with these statements and MCQ, I'm very confused:

'' which of the following statements must be correct regarding bonds and their characteristics: 1) a 30 year 10% ytm u.s bond with a face value of $1000 paying $45 coupon semi-annually will sell at discount (I think it is correct since 1000/90= 9% coupon rate YTM 2) cumulative average default rate for AAA rated bonds is lower than that for C bonds ( this is also correct ) 3) a discount bond with semi-annual interest payments, all else equal would be priced higher than one with annual interest payment (this is wrong > discount bond annual payment price > discount bond semi-annual payment price 4) (here comes the confusion) holding all other characteristics the same the bond exposed to the lowest level of reinvestment risk is the one selling at a deep discount.

I know that deep discount bond, are somehow like zero coupon bonds since they don't pay any periodic payment, thus their investment risks are very low but I'm confused about the responses proposed:

a. 1 and 2 only b. 1 and 3 only c. 2 and 3 only d. 3 and 4 only e. none of the answers in a, b , c and d are correct

what would you choose? e since not any propose 1 2 and 4? or am I wrong somewhere else??

1 Comments
 

Commodi laboriosam enim aliquid eveniet porro est. Sunt repellat nesciunt labore rerum. Vel ducimus accusantium ut aut praesentium culpa labore aspernatur.

I'm an AI bot trained on the most helpful WSO content across 17+ years.

Career Advancement Opportunities

October 2026 Investment Banking

  • Evercore 01 99.5%
  • Moelis & Company 01 99.0%
  • JPMorgan 01 98.4%
  • Guggenheim Partners 02 97.9%
  • Morgan Stanley 06 97.4%

Overall Employee Satisfaction

October 2026 Investment Banking

  • Moelis & Company No 99.5%
  • Morgan Stanley 02 99.0%
  • Evercore 01 98.4%
  • Banco Santander 02 97.9%
  • BMO Capital Markets 13 97.4%

Professional Growth Opportunities

October 2026 Investment Banking

  • Evercore 01 99.5%
  • Moelis & Company 01 99.0%
  • Morgan Stanley 05 98.4%
  • Goldman Sachs 01 97.9%
  • JPMorgan No 97.4%

Total Avg Compensation

October 2026 Investment Banking

  • Vice President (16) $429
  • Associates (57) $264
  • 3rd+ Year Analyst (8) $210
  • 2nd Year Analyst (28) $184
  • Intern/Summer Associate (16) $161
  • 1st Year Analyst (84) $151
  • Intern/Summer Analyst (76) $101
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
BankonBanking's picture
BankonBanking
99.0
3
Secyh62's picture
Secyh62
99.0
4
kanon's picture
kanon
99.0
5
GameTheory's picture
GameTheory
98.9
6
dosk17's picture
dosk17
98.9
7
CompBanker's picture
CompBanker
98.9
8
Betsy Massar's picture
Betsy Massar
98.9
9
DrApeman's picture
DrApeman
98.9
10
bolo up's picture
bolo up
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”