You buy a bond today for $100. Tomorrow, someone comes along and offers to purchase the bond for $85. What does this imply about their risk premium relative to your risk premium? If the bond has a $10 coupon, what is their current yield? higher; 11.76% lower, 11.76% lower; 17.65% higher: 10%

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
You buy a bond today for $100.
Tomorrow, someone comes along and
offers to purchase the bond for $85.
What does this imply about their risk
premium relative to your risk premium? If
the bond has a $10 coupon, what is their
current yield? higher; 11.76% lower,
11.76% lower; 17.65% higher: 10%
Transcribed Image Text:You buy a bond today for $100. Tomorrow, someone comes along and offers to purchase the bond for $85. What does this imply about their risk premium relative to your risk premium? If the bond has a $10 coupon, what is their current yield? higher; 11.76% lower, 11.76% lower; 17.65% higher: 10%
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