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An investor buys an 8.0% coupon bond to yield 7.0%
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22 votes
22 votes
An investor buys an 8.0% coupon bond to yield 7.0%

User Nisham Mahsin
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1 Answer

16 votes
16 votes

Answer:

Step-by-step explanation:

This bond has a coupon of 8.0% and a yield-to-maturity of 7.0%, indicating that the bond is trading at a premium. The price of a bond will always trend towards par as maturity approaches. Given that this bond is trading at a premium (e.g. 105% of par), the price would need to decrease to arrive at par value

User Munish Thakur
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