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Tutorial 25801

A Treasury bond has an 8% annual coupon and a 7.5% yield to maturity. Which of the following statements is CORRECT? a) The bond sells at a price belo...

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Question:

A Treasury bond has an 8% annual coupon and a 7.5% yield to maturity.  Which of the following statements is CORRECT?

a)      The bond sells at a price below par.

b)      The bond sells at a discount.

c)       The bond has a current yield greater than 8%.

d)      If the yield to maturity remains constant, the price of the bond will decline over time.

e)      The bond’s required rate of return is less than 7.5%.

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