A 10-year bond pays an annual coupon, its YTM is 8%, and it currently trades at a premium. Which of the following statements is CORRECT?

Question

Quizplus · Accepted Answer

Answers b, c, and d are clearly wrong, and answer a is clearly correct. Answer e is also wrong, but this is not obvious to most people. We can demonstrate that e is incorrect by using the following example.
 $$\begin{array} { l r } 
\text { Par } & \$ 1,000 \
\text { YMM } & 8.00 \% \
\text { Maturity } & 10 \
\text { Price } & \$ 1,100 \
\text { Payment } & \$ 94.90 \
\text { Coupon rate } & 9.49 \% \
\text { Curentyield } & 8.63 \% \text { The current yield is preater thar } 8 \%
\end{array}$$

A 10-Year Bond Pays an Annual Coupon, Its YTM Is