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A bond has a face value of $1,000, a coupon rate of 8%, and a maturity of 10 years. It pays interest annually, and the
- A bond has a face value of $1,000, a coupon rate of 8%, and a maturity of 10 years. It pays interest annually, and the yield to maturity is 12%. In WORDS (1-2 complete sentences each) answer the following questions.
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- What does it mean that the bond above has a face value of $1,000?
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- What does it mean that the bond has a coupon rate of 8%?
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- What does it mean that the bond has a maturity of 10 years?
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- Explain the difference between coupon rate and yield to maturity.
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- What happens to bond price as yield to maturity increases? Explain why.
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- What does it mean if the bond has a rating of AA?
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- What does it mean if the bond has an offer price quoted as 96.250?
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- What does it mean to say that the bond is traded over-the-counter OTC?
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Asset Pricing
Authors: John Cochrane
1st Edition
0691121370,1400829135
