Which of the following bonds is trading at a premium? Question 10 options: 1) a

Question

Which of the following bonds is trading at a premium?

Question 10 options:

1) a five-year bond with a $2000 face value whose yield to maturity is 7.0% and coupon rate is 7.2% APR paid semiannually 2) a ten-year bond with a $4000 face value whose yield to maturity is 6.0% and coupon rate is 5.9% APR paid semiannually 3) a 15-year bond with a $10,000 face value whose yield to maturity is 8.0% and coupon rate is 7.8% APR paid semiannually 4) a two-year bond with a $50,000 face value whose yield to maturity is 5.2% and coupon rate is 5.2% APR paid monthly

Explanation / Answer

1) $   -2,016.63 PV(3.5%,10,72,2000) 2) $   -3,970.25 PV(3%,20,118,4000) 3) $   -9,827.08 PV(4%,30,390,10000) 4) $ -50,000.38 PV(0.4333%,24,216.6667,50000) Hence, a five-year bond with a $2000 face value whose yield to maturity is 7.0% and coupon rate is 7.2% APR paid semiannually is elling at premium

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