Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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a) 1) If coupon rate is greater than Yield to maturity, then bond is trading at Premium
2) If coupon rate is less than Yield to maturity, then bond is trading at discount
3) if coupon rate is equal to yield to maturity, then bond is trading at par
b) Zero coupon Bond is bond which is issued at discount and pays only maturity value at the end of maturity of the bond. It doesn't pay I,e coupon (interest) on the bond. So it always trades at discount
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