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The Sisyphean Company has a bond outstanding with a face value of $1000 that reaches maturity in 15 years.The bond certificate indicates that the stated coupon rate for this bond is 8% and that the coupon payments are to be made semiannually.
-Assuming the appropriate YTM on the Sisyphean bond is 9%,then this bond will trade at
A)a premium.
B)a discount.
C)par.
D)None of the above

Question

Quizplus · Accepted Answer

Since the bond's YTM is higher than its coupon rate, it will trade at a discount to its face value to attract buyers who require a higher yield.

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