Question

If a bond's coupon rate is smaller than the yield to maturity, then

a) Not enough information

b) The face value payment must equal the initial purchase cost

c) The face value payment must exceed the initial purchase cost

d) The face value payment must fall short of the initial purchase cost

Which of the following bonds is different than the others?

a) (-90, 15, 15, 15, 105)

b) (-18, 3, 3, 3, 21)

c) (-45, 7.5, 7.5, 7.5, 50)

d) (-6, 1, 1, 1, 7)

Answer 1

Coupon Rate < YTM

The Face value must be more than the Value of Bond in the market.

Option C is correct.