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If a bond is currently trading at its face (par) value, then it must be the case that:

the bond's yield to maturity is less than its coupon rate.

the bond's yield to maturity is greater than its coupon rate.

the bond is a zero-coupon bond.

the bond's yield to maturity is equal to its coupon rate.

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Collen Von
Collen VonLv2
28 Sep 2019

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Related questions

A bond is selling for $917.76. It has an annual coupon payment of 3.5% of its $1,000 par value and matures in 17 years. Compute:

a. The bond's yield to maturity

b. the bond's current yield and capital gains yield.

c. The bond's nominal yield to maturity if the coupon payment is made semiannually.

d. The bond's effective yield to maturity of the coupon payment is made semi-annually.

Plese use excel for calculations and explanation.

1) Suppose you have a semi-annual coupon paying bond that has 10 years of maturity left, has a par value
of $65,100, has a coupon rate of 7.23%, and has just paid its most recent coupon payment 10 days ago.
Currently, this bond trades for 97:13. What is this bond's annual yield as reported by the financial press?
What is this bond's annual yield based on a Time Value of Money-correct calculation?

2)Suppose you have a semi-annual coupon paying bond that has 10 years of maturity left, a time to call of
6 years, has a coupon rate of 7.23%, a call premium of 15%, has a par value of $65,100, and has just
paid its most recent coupon payment 10 days ago. Currently, this bond trades for 97:13. What is this
bond's annual yield as reported by the financial press? What is this bond's annual yield based on a Time
Value of Money-correct calculation

2. Bonds


a. Suppose a 10-year, 1,000 face value bond with a 6% coupon rate and semiannual coupons is trading for a quoted price of 107.79.
(i) What is the bond's yield to maturity (expressed as an APR with semiannual compounding)? (ii) If the bond's yield to maturity changes to 4% APR, what will the bond's price be?

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