Asked by
Anika Jaswal
on Nov 28, 2024
Verified
A 10-year bond pays an annual coupon,its YTM is 8%,and it currently trades at a premium.Which statement regarding the bond's yield is true?
A) The bond's current yield is less than 8%.
B) If the yield to maturity remains at 8%, then the bond's price will decline over the next year.
C) The bond's coupon rate is less than 8%.
D) If the yield to maturity remains at 8%, then the bond's price will remain constant over the next year.
Yield To Maturity
The total return anticipated on a bond if the bond is held until the end of its lifetime.
Annual Coupon
Annual Coupon refers to the yearly interest payment made by a bond issuer to its bondholders, based on the bond's face value.
Premium
The amount by which the price of a financial instrument or commodity exceeds its intrinsic or face value, often related to insurance costs or bond prices.
- Analyze the correlation between market interest rates and their consequences on the yields and prices of bonds.
Verified Answer
KJ
Learning Objectives
- Analyze the correlation between market interest rates and their consequences on the yields and prices of bonds.