Question

Consider a bond with a 6% annual coupon and a face value of $1100

Complete the following table. ​(Enter your responses rounded to two decimal​ places.)

Years to Maturity	Yield to Maturity	Current Price
33	44​%	​$1161.051161.05
33	66​%	​$11001100
44	66​%	​$11001100
66	44​%	​$1215.331215.33
66	88​%	​$998.30998.30

When the yield to maturity is   the coupon​ rate, the​ bond's current price is below its face value. For a given​ maturity, the​ bond's current price as the yield to maturity rises. For a given yield to​ maturity, a​ bond's value as its maturity increases. When the yield to maturity is   the coupon​ rate, a​ bond's current price equals its face value regardless of the number of years to maturity.

Answer 1

I am using the current price as given.

Years to maturity	Yield to maturity	Current price
3	4%	1161.05
3	6%	1100.00
4	6%	1100.00
6	4%	1215.33
6	8%	998.30

Refer to above table, following observations can be made.

When the yield to maturity is higher than the coupon​ rate, the​bond's current price is below its face value. For a given​ maturity, the​ bond's current price decreases as the yield to maturity rises. For a given yield to​ maturity, a​ bond's value as increases its maturity increases. When the yield to maturity is equal to the coupon ​rate, a​ bond's current price equals its face value regardless of the number of years to maturity.