A problem with the yield on discount basis is that it ________ the yield to maturity, and this ________ increases, the ________ the maturity of the discount bond.

A problem with the yield on discount basis is that it ________ the yield to maturity, and this ________ increases, the ________ the maturity of the discount bond.




A) understates; understatement; longer
B) understates; understatement; shorter
C) overstates; overstatement; longer
D) overstates; overstatement; shorter




Answer: A


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