question archive A 10-year corporate bond has an annual coupon payment of 9 percent
A 10-year corporate bond has an annual coupon payment of 9 percent
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A 10-year corporate bond has an annual coupon payment of 9 percent. The bond is currently selling at par ($1,000). Which of the following statements is most correct?
Select one:
a. The bonds yield to maturity is 9 percent.
b. The bonds current yield is 9 percent.
c. If the bonds yield to maturity remains constant, the bonds price will remain at par.
d. This bond is not selling at a premium or a discount.
e. All of the answers above are correct.
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| The answer is Option e. | ||||||||||||||
| All of the above answers are correct. | ||||||||||||||
| A bond that trades at par has a yield equal to its coupon.Investors expect a return equal to the coupon for the risk of lending to the bond issuer. | ||||||||||||||
| Bonds are quoted at 100 when trading at par.Due to changing interest rates, financial instruments almost never trade exactly at par. | ||||||||||||||
| A bond is not likely to trade at par when interest rates are above or below its coupon rate. | ||||||||||||||
| When a company issues a new security ,if it receives the face value of the security, then the issuance is said to be issued at par. | ||||||||||||||
| If the issuer receives less than the face value for the security,it is issued at discount; if the issuer receives more than the face value for the security, | ||||||||||||||
| it is issued at a premium. | ||||||||||||||
