Which one of the following statements is true? Question 4 options: A) A premium bond has a current yield that exceeds the bond's coupon rate. B) The yield to maturity on a premium bond exceeds the bond's coupon rate. C) The current yield on a par value bond will exceed the bond's yield to maturity. D) The current yield on a premium bond is equal to the bond's coupon rate. E) A discount bond has a coupon rate that is less than the bond's yield to maturity.

E)

A discount bond has a coupon rate that is less than the bond's yield to maturity.

Explanation:

Premium bonds: Coupon rate > Current yield > Yield to maturity

Discount bonds: Coupon rate < Current yield < Yield to maturity

Par value bonds: Coupon rate = Current yield = Yield to maturity

a. $2,000 U; $6,000 U

Explanation:

Material Mix Variance for X = (Actual Usage in standard proportions - Actual Usage in Actual Proportions) * Standard Price per unit

= ((55000*0.3) - 17000) * $4

= $2,000 Unfavorable

Material Yield Variance for X = (Expected input units in standard proportions - Input units based on Actual output) * Standard Price per unit

= ((55000*0.3) - (50000*0.3)) * $4

= $6,000 Unfavorable