header bg

Scan QR code or get instant email to install app

Question:

A 7.5% coupon, semiannual-pay, five-year bond has a yield to maturity of 6.80%. Over the next year, if the bond’s yield to maturity remains unchanged, its price will:

A decrease.
explanation

Because the coupon rate is greater than its yield to maturity, the bond price is at a premium to par value. If the yield remains unchanged, the price will decrease toward par value along its constant-yield price trajectory.

Comments

Leave a Reply

Your email address will not be published.

*