Which of the following bonds would you prefer to be buying?
A) A $10,000 face-value security with a 10 percent coupon selling for $9,000
B) A $10,000 face-value security with a 7 percent coupon selling for $10,000
C) A $10,000 face-value security with a 9 percent coupon selling for $10,000
D) A $10,000 face-value security with a 10 percent coupon selling for $10,000

Question

Quizplus · Accepted Answer

Bond A offers a higher yield to maturity because it is selling at a discount ($9,000) with a higher coupon rate (10%), making it more attractive compared to the others selling at face value.

Which of the Following Bonds Would You Prefer to Be