Question
Consider a fixed coupon bond. The promised yield to maturity on the bond is ________. I. above the coupon rate when the bond sells at
Consider a fixed coupon bond. The promised yield to maturity on the bond is ________.
I. above the coupon rate when the bond sells at a discount, and below the coupon rate when the bond sells at a premium.
II. the discount rate that will set the present value of the par value received from the issuer equal to the bond price.
III. lower than the true compound return on the investment in the bond if all interest payments received are reinvested at a higher rate than the promised yield to maturity.
Group of answer choicesI, II and III.
I and II only.
II and III only.
I only.
I and III only.
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