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A fixed coupon bond with par value of $1,000 has a coupon of 6%, semiannually payable. The current annual nominal market interest rate (i.e., yield to maturity) for this bond is 8%. Therefore the bond is selling ……….. and the bond's current yield is ………..

Respuesta :

holesstanham

Answer:

at a discount; greater than 6%

Explanation:

A fixed coupon bond is a long-term debt paper that has a predetermined and fixed interest rate. This is known as coupon rate. In this example, the bond's yield to maturity is higher than the coupon rate. Therefore, this is selling at a discount. Moreover, because the bond is selling at discount, current yield would be more than coupon rate (6%).

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