Question
Suppose a seven year 1000 bond with a 8.32% coupon rate and semiannual coupons is trading with a yield to maturity of 7.00%. A) is
Suppose a seven year 1000 bond with a 8.32% coupon rate and semiannual coupons is trading with a yield to maturity of 7.00%.
A) is this bond currently trading at a discount, at par, at premium? Explain.
B) if the yield to maturity of the bond rises to 7.12% (APR with semiannual compounding) at what price will the bond trade?
multiple choice which one below based on numbers above?
The bond is current trading at par because the coupon rate is equal to the yield to maturity
The bond is currently trading at premium because the coupon rate is greater than the yield to maturity
The bond is currently trading at premium because the yield to maturity is greater than the coupon rate
The bond is currently trading at a discount because the coupon rate is greater than the yield to maturity.
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Options Trading For Beginners How To Generate Predictable Income And Make A Living Without Taking Big Risks Even If You Re A Complete Beginner
Authors: Greg Middleton
1st Edition
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