Two investors are considering the purchase of Corporation LMQ bonds.The bonds are selling at their par value of $1,000 with a coupon rate of 9%.Investor A decides to buy the bonds and Investor B does not buy the bonds.

Question

Quizplus · Accepted Answer

Since the bonds are selling at par value and have a coupon rate of 9%, the yield to maturity is also 9%. Investor A, who decides to buy, must be satisfied with a return of 9% or less, indicating a required return less than or equal to the bond's yield to maturity.

Two Investors Are Considering the Purchase of Corporation LMQ Bonds