A corporate bond has a coupon rate of 9%,a face value of $1,000,a market price of $850,and the bond matures in 15 years.Therefore,the bond's yield to maturity is

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Quizplus · Accepted Answer

The yield to maturity (YTM) of a bond is the internal rate of return (IRR) if the bond is held until maturity, considering all its payments (coupons) and its final redemption value. It's not the same as the coupon rate when the bond's market price differs from its face value. In this case, since the bond is selling at a discount (market price of $850 less than the face value of $1,000), its YTM will be higher than its coupon rate of 9%. The correct calculation involves solving for the YTM in the bond pricing formula, which would give a result closer to 11.1% than to any of the other options provided.

A Corporate Bond Has a Coupon Rate of 9%,a Face