A bond with a face value of $1,000 is currently traded at a price of $954.33. If the coupon rate of the bond is 6.00%, which one of the following is the most feasible yield to maturity of the bond?
|
Given about a bond,
Face value = $1000
Price of the bond = $954.33
coupon rate = 6%
Years to maturity of the bond is not given, so exact yield to maturity if the bond can not be calculated.
But since bonds price is less than its face value, bond is selling at discount. For a discounted bond, its Yield to maturity is always greater than coupon rate irrespective of the years to maturity.
So, from the given option, 6.66% is most feasible Yield to maturity of the bond.
Option C is correct.
Get Answers For Free
Most questions answered within 1 hours.