1. The yield to maturity on a bond is
A. below the coupon rate when the bond sells at a discount and equal to the coupon rate when the bond sells at a premium.
B. the “risk adjusted” interest rate that will set the present value of all the cash flows from the bond equal to the market price of the bond
C. based on the assumption that any payments received are reinvested at the coupon rate.
D. None of the options
2. TIPS (Treasury Inflation Protected Securities) are
A. securities formed from the coupon payments only of government bonds.
B. securities formed from the principal payments only of government bonds.
C. government bonds with par value linked to the general level of prices.
D. government bonds with coupon rate linked to the general level of prices.
E. zero-coupon government bonds.