A 6% five-year bond was issued at $918.89. The face value and yield to maturity for the bond are
$\begin{array} {crl}
& \text { Face value } & \text { Yield to maturity } \\end{array}$
a)$\begin{array} { l l l } & \$ 918.89 &&& \text { greater than } 6 \% . \\end{array}$
b)$\begin{array} { l l l }& \$ 918.89 &&& \text { less than } 6 \% . \\end{array}$
c)$\begin{array} { l l l } & \$ 1,000.00 && \text { greater than } 6 \% . \\end{array}$
d)$\begin{array} { l l l } & \$ 1,000.00 && \text { less than } 6 \% . \\end{array}$

A) Choice A
B) Choice B
C) Choice C
D) Choice D

Question

A 6% five-year bond was issued at $918.89. The face value and yield to maturity for the bond are 
$\begin{array} {crl} 
& \text { Face value } & \text { Yield to maturity } \\end{array}$
a)$\begin{array} { l l l }   & \$ 918.89 &&& \text { greater than } 6 \% . \\end{array}$
b)$\begin{array} { l l l }& \$ 918.89 &&& \text { less than } 6 \% . \\end{array}$
c)$\begin{array} { l l l }   & \$ 1,000.00 && \text { greater than } 6 \% . \\end{array}$
d)$\begin{array} { l l l }  & \$ 1,000.00 && \text { less than } 6 \% . \\end{array}$

A) Choice A
B) Choice B
C) Choice C
D) Choice D

Quizplus · Accepted Answer

Since the bond is issued at a discount (price less than face value), this indicates that the yield to maturity is greater than the coupon rate. The face value of a standard bond is typically $1,000.

A 6% Five-Year Bond Was Issued at $918 Face value Yield to maturity \begin{array} {crl} & \text { Face value } & \text { Yield to maturity } \\\end{array}​ Face value ​ Yield to maturity ​

A 6% Five-Year Bond Was Issued at $918 $\begin{array} {crl} & \text { Face value } & \text { Yield to maturity } \\\end{array}$