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Estimate what is the yield to maturity on the bond

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Reference no: EM132993411

Problem 1: If the yield to maturity of a bond is less than the coupon? rate, then the price will be? ___________ the face value.
a) equal to
b) lower than
c) higher than

Problem 2: As the maturity date of a bond? approaches,
a) default risk decreases.
b) the bond will always sell at a discount.
c) the bond will always sell at a premium.
d) the price of the bond approaches its face value.

Problem 3: A bond has 10 years remaining to maturity, pays annual coupons (yesterday) of $6, and has a face value of $100. The current price of the bond is $125.591 and the price next year is expected to be $123.358. (Interest rates are not expected to change over the coming year.) What is the yield to maturity on the bond?

Reference no: EM132993411

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