Consider a 5-year bond with a 10% coupon that has a present yield to maturity of 8%.If interest rates remain constant, one year from now, the price of this bond will be

Question

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The price of a bond and its yield to maturity are inversely related. Since the present yield to maturity is 8%, and the coupon rate is 10%, the bond is currently selling at a premium above par value since the coupon rate is higher than the yield to maturity. 
If interest rates remain constant, the bond's yield to maturity will remain 8%, but since a year has passed, the bond will have one less year until maturity. This means that the bond's price will decrease to reflect the lower time value of money. Therefore, the price of the bond will be lower one year from now.

Consider a 5-Year Bond with a 10% Coupon That Has