A $1,000 15-year bond reportedly sells for $850. Which of the following assertions is the most likely to be true? a. The yield to maturity of the bond is higher than the coupon rate. b. The bond's price would sit at $850 if the yield to maturity is stable before the bond matures. c. The present yield of a bond is equivalent to the coupon rate. d. Both b and c are true. e. All of the above claims are true.
A $1,000 15-year bond reportedly sells for $850. Which of the following assertions is the most likely to be true? a. The yield to maturity of the bond is higher than the coupon rate. b. The bond's price would sit at $850 if the yield to maturity is stable before the bond matures. c. The present yield of a bond is equivalent to the coupon rate. d. Both b and c are true. e. All of the above claims are true.
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter4: Bond Valuation
Section: Chapter Questions
Problem 17P: Bond Value as Maturity Approaches An investor has two bonds in his portfolio. Each bond matures in 4...
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A $1,000 15-year bond reportedly sells for $850.
Which of the following assertions is the most likely to be true?
a. The yield to maturity of the bond is higher than the coupon rate.
b. The
c. The present yield of a bond is equivalent to the coupon rate.
d. Both b and c are true.
e. All of the above claims are true.
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