There didn’t seem to be a correct answer to this question… so I just selected one. How can “The yield indicates a market price above par” be correct? The yield is higher than the nominal rate, indicating the market price is below par (trading at a discount) right?
The explanation seems correct.
Hi @bradydayton!
Thanks for being patient; with the holidays, I’ve been away from this board a bit.
You are correct on your reasoning, but take a look at the question.
“What statement is false regarding this security?”
This preferred stock is trading at a discount, as its coupon (4%) is lower than the yield (5%). Therefore, the right answer is the answer choice in the question. It’s the false statement. The other two answers are correct.
Does that make sense?
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haha wow embarrassing! Thanks
All good! This happens to the best of us (myself included). The test will do this to you as well… gotta watch out for the excepts and the what statement is false questions. Practice is the best time to make the mistake!
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