For a 20-year $1000 par value 8% annual coupon bond thatselling at a premium and makes semiannual coupon payments, what of the following is TRUE?O A. The YTM of this bond is below 8%.O B. The price of this bond is below its par value.O C. Because this bond is selling at a premium, it would be worth more than $1000 at maturity.O D. The bond pays $160 in interest every six months.

A. The YTM of this bond is below 8%. B. The price of this bond is below its par value. O c. Because this bond is selling at a premium, it would be worth more than $1000 at maturity. DD. The bond pays $160 in interest every six months.

A. The YTM of this bond is below 8%. B. The price of this bond is below its par value. O c. Because this bond is selling at a premium, it would be worth more than $1000 at maturity. DD. The bond pays $160 in interest every six months.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

For a 20-year $1000 par value 8% annual coupon bond that
selling at a premium and makes semiannual coupon payments, what of the following is TRUE?
O A. The YTM of this bond is below 8%.
O B. The price of this bond is below its par value.
O C. Because this bond is selling at a premium, it would be worth more than $1000 at maturity.
O D. The bond pays $160 in interest every six months.

Expert Solution

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Price of bond depends on yield to MATURITY and coupon rate of bonds.

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