A bond with a 12% coupon,10 years to maturity and selling at 88 has a yield to maturity of _______.

Name: A bond with a 12% coupon,10 years to maturity and selling at 88 has a yield to maturity of _______.
Brand: Quizplus
Rating: 4.9 (56 reviews)

Question

Quizplus · Accepted Answer

The bond is selling at a discount (88% of par value) and has a high coupon rate of 12%, which indicates that the yield to maturity will be higher than the coupon rate. Calculating the yield to maturity for this bond would result in a value over 14%.

A Bond with a 12% Coupon,10 Years to Maturity and Selling