Question

a bond with a face value of $1,000 has 8 years until maturity, has a coupon rate of 8%, and sells for $1,100. what is the yield to maturity if interest is paid once a year? note: do not round intermediate calculations. enter your answer as a percent rounded to 4 decimal places. what is the yield to maturity if interest is paid semiannually? note: do not round intermediate calculations. enter your answer as a percent rounded to 4 decimal places.

Answer 1

More than 8%.
When the bond is selling at a discount, the yield to maturity is greater than 8%. We know that if the yield to maturity were 8%, the bond would sell at par. At a price below par, the yield to maturity exceeds the coupon rate.