Question: (a) Consider a 10-year par bond yielding 5%. How much of the bond's value comes from principal and how much from coupon payments? How

(a) Consider a 10-year par bond yielding 5%. How much of the

(a) Consider a 10-year par bond yielding 5%. How much of the bond's value comes from principal and how much from coupon payments? How does your answer change for a 30-year par bond yielding 5%? (b) Why would anyone buy a bond selling at a premium when after holding that bond to maturity it will be worth only par?

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a For a 10year par bond yielding 5 the bonds value is equal to its face value In this case since it is a par bond the bonds value comes entirely from ... View full answer

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