Yield to maturityThe Salem Company bond currently sells for

$1 comma 219.481,219.48,

has a coupon interest rate of

1414%

and a

$ 1000$1000

par value, pays interest

annually,

and has

1010

years to maturity.a. Calculate the yield to maturity

(YTM)

on this bond.

b. Explain the relationship that exists between the coupon interest rate and yield to maturity and the par value and market value of a bond.

a. The yield to maturity on this bond is

nothing%.

(Round to three decimal places.)

b. Explain the relationship that exists between the coupon interest rate and yield to maturity and the par value and market value of a bond. (Select the best answer below.)

A.

The market value of the bond approaches its par value as the time to maturity declines. The yield to maturity approaches the coupon interest rate as the time to maturity increases.

B.

The market value of the bond approaches its par value as the time to maturity declines. The yield to maturity approaches the coupon interest rate as the time to maturity declines.

C.

The market value of the bond approaches its par value as the time to maturity increases. The yield to maturity approaches the coupon interest rate as the time to maturity increases.

D.

The market value of the bond approaches its par value as the time to maturity increases. The yield to maturity approaches the coupon interest rate as the time to maturity declines.