A 15-year bond with a face value of $1,000 currently sells for $850. Which of the following statements is CORRECT? Please explain how also.
Select one:
a. The bond's coupon rate exceeds its current yield.
b. The bond's current yield exceeds its yield to maturity.
c. The bond's yield to maturity is greater than its coupon rate.
d. The bond's current yield is equal to its coupon rate.
e. If the yield to maturity stays constant until the bond matures, the bond's price will remain at $850.
A 15-year bond with a face value of $1,000 currently sells for $850. Which of the following statements is CORRECT? Please explain how also.
Select one:
a. The bond's coupon rate exceeds its current yield.
b. The bond's current yield exceeds its yield to maturity.
c. The bond's yield to maturity is greater than its coupon rate.
d. The bond's current yield is equal to its coupon rate.
e. If the yield to maturity stays constant until the bond matures, the bond's price will remain at $850.
Related questions
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. |
