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Bond valuation. A bond with a face value of $1,000 matures in 9 years and has a 7% semiannual coupon. The bond currently is traded at $846. Which of the following statements is CORRECT?

Select one:
a. The nominal yield to maturity is 8.28% and you would pay $846 for each bond if you think that a "fair" market interest rate (discount rate) for such bonds is 9.59%.
b. The nominal yield to maturity is 8.67% and you would pay $846 for each bond if you think that a "fair" market interest rate (discount rate) for such bonds is 5.59%.
c. The nominal yield to maturity is 9.59% and you would pay $846 for each bond if you think that a "fair" market interest rate (discount rate) for such bonds is 10.67%.
d. The nominal yield to maturity is 9.59% and you would pay $846 for each bond if you think that a "fair" market interest rate (discount rate) for such bonds is 8.67%.
e. The nominal yield to maturity is 4.80% and you would pay $846 for each bond if you think that a "fair" market interest rate (discount rate) for such bonds is 6.67%

User Chl
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1 Answer

3 votes
The correct answer is C
User TheRimalaya
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8.2k points
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