Question
A bond is priced at 95 and has a coupon rate 9% and a yield of 7%. Is this bond priced correctly? A) Yes, it
A bond is priced at 95 and has a coupon rate 9% and a yield of 7%. Is this bond priced correctly? A) Yes, it is priced correctly because the buyer should pay a discount due to the higher than yield coupon rate. B) Yes, it is priced correctly because the buyer should pay a discount due to the lower than yield coupon rate. C) No, it is not priced correctly because the buyer should pay a discount due to the higher than yield coupon rate. D) No, it is not priced correctly because the buyer should pay a premium due to the higher than yield coupon rate.
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