Bond B has 10 years to maturity, face value of 100, and a coupon rate...
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Accounting
Bond B has 10 years to maturity, face value of 100, and a coupon rate of 6%; the bond pays coupons semi-annually. Market yield on similar securities is 4% per half year. You can buy bond B from a friend for $90. Should you do it?
a.Yes, since $90 is lower than the bonds fair value.
b.You are indifferent as the bond is fairly priced at $90.
c.None of the other choices
d.No, since $90 is higher than the bonds fair value.
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