Devin, a private investor, purchases $1,000 par value bonds with a 12 percent coupon rate and a 9 percent yield to maturity. Devin will hold the bonds until maturity. Thus, he will earn a return of ____ percent.

Question

Quizplus · Accepted Answer

Devin will earn a return equal to the yield to maturity (9 percent) since he plans to hold the bonds until maturity. The coupon rate is relevant for the bond's periodic interest payments, but the yield to maturity reflects the total return he will receive by holding the bond until it matures.

Devin, a Private Investor, Purchases $1,000 Par Value Bonds with a 12