Which answer is correct and why?
A 10-year bond has a 10% annual coupon rate and a yield to maturity of 12%. This bond can be called in 5 years at a call price of $1,050; the bond's par value is $1,000.
Which one of the following statements is most correct?
a. The bond's current yield is greater than 10%.
b. The bond's yield to call is less than 12%.
c. The bond is selling at a price below par.
d. Both choices a and c above are correct.
e. None of the above answers is correct.© BrainMass Inc. brainmass.com March 4, 2021, 5:46 pm ad1c9bdddf