I am confused about purchasing a 10% bond and my broker keeps saying it has a 9% yield to maturity. Can you explain this for me?
10% bond means that the coupon rate on the bond is 10%. Therefore, if the face value of the bond is $1000, you will receive $100 per annum as coupon interest payment. The yield to maturity means the average rate of return you ...
The solution discusses yield and maturity and 10% bonds.