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An investor holds a 10 year bond pays a coupon rate of 9%. The yeid to maturity of the bond is 10% . The bond is trading:

User Rajen
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1 Answer

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Answer:

the bond is trading at a discount

Step-by-step explanation:

There is an inverse relationship between the yield and the price of the bond.

As the yield goes up, the price of the bond goes down and as the yield goes down, the price of the bond goes up.

The yield - 10%, is greater than the coupon rate - 9%, the price will be less than the par value, and we say that the bond is trading at a discount.

User Hatboyzero
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