A 2-year maturity bond with face value of $1,000 makes annual coupon payments of
ID: 2659665 • Letter: A
Question
A 2-year maturity bond with face value of $1,000 makes annual coupon payments of $106 and is selling at face value. What will be the rate of return on the bond if its yield to maturity at the end of the year is
a. 6%
b. 10.6%
c. 12.6%
A 2-year maturity bond with face value of $1,000 makes annual coupon payments of $106 and is selling at face value. What will be the rate of return on the bond if its yield to maturity at the end of the year is
a. 6%
b. 10.6%
c. 12.6%
Explanation / Answer
c. 12.6%