A 15-year bond with a face value of $1,000 currently sells for $850. Which of the following statements is CORRECT? a. The bond’s current yield exceeds its yield to maturity. b.The bond’s current yield is equal to its coupon rate. c.The bond’s coupon rate exceeds its current yield. d.The bond’s yield to maturity is greater than its coupon rate. e.If the yield to maturity stays constant until the bond matures, the bond’s price will remain at $850.

A 15-year bond with a face value of $1,000 currently sells for $850. Which of the following statements is CORRECT? a. The bond’s current yield exceeds its yield to maturity. b.The bond’s current yield is equal to its coupon rate. c.The bond’s coupon rate exceeds its current yield. d.The bond’s yield to maturity is greater than its coupon rate. e.If the yield to maturity stays constant until the bond matures, the bond’s price will remain at $850.

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter12: Investing In Stocks And Bonds

Section: Chapter Questions

Problem 8FPE: Describe and differentiate between a bonds (a) current yield and (b) yield to maturity. Why are...

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