I purchase a 10 percent coupon bond. Based on my purchase price,I calculate a yield to maturity of 8 percent. If I hold this bond to maturity,then my return on this asset is

Question

Quizplus · Accepted Answer

The yield to maturity of 8 percent represents the expected return if the bond is held to maturity. Therefore, the return on this asset if held to maturity is 8 percent. The coupon rate of 10 percent is the interest rate paid annually on the bond, but it does not necessarily represent the return if sold before maturity or if the market interest rate changes.

I Purchase a 10 Percent Coupon Bond