Series 7 - General Securities Representative Exam

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If an investor buys a 7 percent ZYX bond yielding 8.5%, the investor

Bought the bond at a premium
A
Bought the bond at par
B
Bought the bond at a discount
C
Must have bought the bond early
D

Explanations

The question states that the nominal yield is 7 percent and the bond is yielding 8.5 percent. The 8.5 percent is the yield to maturity. This means that the investor bought this bond below par; which is at a discount. There is no information to suggest that he bought the bond early