A bond with a face value of $1000 has annual coupon payments of $100 and was issued seven years ago.The bond currently sells for $1085, has eight years left to maturity.This bond's [blank] must be less than 10%.

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The coupon rate is fixed at 10% ($100 annual payment on a $1000 face value bond), which is already given. The current yield, calculated as the annual coupon payment divided by the current price ($100/$1085), is less than 10%. The yield to maturity (YTM) takes into account the entire return of the bond if held to maturity, including coupon payments and the difference between its purchase price and its face value at maturity. Given the bond sells for more than its face value ($1085 vs. $1000), the YTM must be less than the coupon rate to account for the premium paid over its face value, thus also making it less than 10%.

A Bond with a Face Value of $1000 Has Annual