Loading...
CFA Level 1
Fixed Income

Understanding Yield to Maturity of a Discount Bond

Medium Fixed Income Valuation Yield Measures

A company issues a bond with a face value of $1,000, a coupon rate of 5% paid annually, and a maturity of 10 years. The bond is currently trading at a price of $950. If you are to calculate the yield to maturity (YTM) of the bond, which of the following statements about the relationship between the coupon rate, the bond's price, and the yield is true?

Hint

Submitted10.9K
Correct7.3K
% Correct67%