Use the information for the question(s) below.
-The Sisyphean Company has a bond outstanding with a face value of $1000 that reaches maturity in 5 years. The bond certificate indicates that the stated coupon rate for this bond is 8.1% and that the coupon payments are to be made semiannually. Assuming the appropriate YTM on the Sisyphean bond is 10.6%, then this bond will trade at ________.
A) a premium
B) a discount
C) par
D) none of the above

Question

Use the information for the question(s) below. 
-The Sisyphean Company has a bond outstanding with a face value of $1000 that reaches maturity in 5 years. The bond certificate indicates that the stated coupon rate for this bond is 8.1% and that the coupon payments are to be made semiannually. Assuming the appropriate YTM on the Sisyphean bond is 10.6%, then this bond will trade at ________.
A) a premium 
B) a discount 
C) par 
D) none of the above

Quizplus · Accepted Answer

B) As the coupon rate of 8.1% is less than the YTM of 10.6% on the bonds, so they will trade at a discount.

Use the Information for the Question(s) Below