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Question 14
Consider a 5year bond with a 10% coupon rate that has a present yield to maturity of 8%. If interest
rates remain constant, one year from now the price of this bond will be _______.
(a) higher
(b) lower
(c) the same
Question 15
Consider a 5year bond with a 10% coupon rate that trades at a premium. The yield to maturity of this
bond must be __________.
(a) Lower than 10%
(b) Higher than 10%
(c) Equal to 10%
(d) Need the face value to determine the yield to maturity
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