A bond with face value $1,000 has a current yield of 6% and a coupon rate of

Question:

A bond with face value $1,000 has a current yield of 6% and a coupon rate of 8%.

a. If interest is paid annually, what is the bond’s price?

b. Is the bond’s yield to maturity more or less than 8%?

Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...

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