If a bond has a coupon of 5% and YTM of 7%, what type of bond is it (premium or discount)?
If a bond has a coupon of 5% and YTM of 7%, what type of bond is it (premium or discount)?
Homework Answers
Correct answer is Discount
When a bond has a coupon of 5% and YTM of 7%, we can say that such bond is selling at discoun.
Since bond price is Discounted at YTM, When YTM is more than coupen, present value will reduce and consequently price will ends at discounted one.
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If a bond has a coupon of 5% and YTM of 7%, what type of bond is it (premium or discount)?
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