The yield to maturity on a bond is A. below the coupon rate when the bond sells at a discount and equal to the coupon rate when the bond sells at a premium. B. the discount rate that will set the present value of the payments equal to the bond price. C. None of the options are correct. D. based on the assumption that any payments received are reinvested at the coupon rate.
The yield to maturity on a bond is A. below the coupon rate when the bond sells at a discount and equal to the coupon rate when the bond sells at a premium. B. the discount rate that will set the present value of the payments equal to the bond price. C. None of the options are correct. D. based on the assumption that any payments received are reinvested at the coupon rate.
Chapter6: Fixed-income Securities: Characteristics And Valuation
Section: Chapter Questions
Problem 9QTD
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The yield to maturity on a bond is
A. below the coupon rate when the bond sells at a discount and equal to the coupon rate when the bond sells at a premium.
B. the discount rate that will set the present value of the payments equal to the bond price.
C. None of the options are correct.
D. based on the assumption that any payments received are reinvested at the coupon rate.
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