Question

Consider a bond with a 6% annual coupon and a face value of $900 Complete the following table. (Enter your responses rounded to two decimal places) Years toYield to Current Maturity Maturity Price 4% 6% 6% 4% 8% 6 the coupon rate, the bond's current price is below its face value. For a given maturity, the When the yield to maturity is bond's current price maturity increases. When the yield to maturity is the number of years to maturity as the yield to maturity rises. For a given yield to maturity, a bond's value as its the coupon rate, a bond's current price equals its face value regardless of

Answer 1

Years	yield (%)	current price
3	4	950.94
3	6	900
4	6	900
6	4	996.43
6	8	812.90

1.) When yield to maturity above, coupon rate, bond current price is below face value $900

2.)For given maturity, bond price falls

, as yield to maturity rise, going from maturity rate of 4 to 6%, keeping maturity years equal to 3, current price falls.

3.) For given yield rate, bond value rises, as it's maturity increases.

4.) When yield to maturity equals coupon rate, bond price equals face value.