A bond that matures in 10 years sells for $925. The bond has a face value of $1,000 and an 8 percent annual coupon.
What is the bond’s current yield?
a. 8.65%
b. 8.00%
c. 8.33%
d. 7.88%
e. 8.95%
Answer: A
What is the bond’s yield to maturity?
a. 9.00%
b. 9.55%
c. 9.18%
d. 8.75%
e. 9.33%
Answer: C
Assume that the yield to maturity remains constant for the next three years. What will be the price of the bond three years from today?
a. $ 925
b. $ 956
c. $1,000
d. $ 977
e. $ 941
Answer: E
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