A $1000 bond is redeemable at par in 10 years and is callable at par after 7 years.The price of the bond to yield j₂ = 10% is • $982.37 assuming the bond is held to maturity • $975.48 assuming the bond is called after 7 years Which of the following statements is true? A)If an investor pays $975.48 and the bond is held to maturity,the yield will equal j₂ = 10% B)If an investor pays $975.48 and the bond is called immediately after 7 years,the yield will exceed j₂ = 10% C)If an investor pays $982.37 and the bond is called after 7 years,the yield will exceed j₂ = 10% D)If an investor pays $982.37 and the bond is held to maturity,the yield will equal j₂ = 10%

Question

Quizplus · Accepted Answer

If an investor pays $982.37 and the bond is held to maturity, the yield will equal j2 = 10%.

A $1000 Bond Is Redeemable at Par in 10 Years