Question

A 20-year, $1,000 par value bond has a 6.4% annual payment coupon. The bond currently sells for $1,080. If the yield to maturity remains at its current rate, what will the price be 4 years from now? A 7 percent corporate bond that pays interest semi-annually was issued last year. Which two of the following most likely apply to this bond today if the current yield-to-maturity is 6 percent?

I. a structure as an interest-only loan

II. a current yield that equals the coupon rate

III. A market price that is lower than its face value

IV. a market price that is higher than its face value

Group of answer choices:

II and IV only

I and IV only

I and III only

III and IV only

II and III only

Answer 1

1)