Question: Type Issue Date Price Coupon Rate Maturity Date YTM Current Yield Rating Bond August 2002 $96.22 3.25% 8-15-2012 ? 3.378% AAA 1. Assume a $100,000

Type Issue Date Price Coupon Rate Maturity Date YTM Current Yield Rating
Bond August 2002 $96.22 3.25% 8-15-2012 ? 3.378% AAA

1. Assume a $100,000 par value. What is the yield to maturity of the August 2002 Treasury bond with semiannual payment?

2. How do you explain this relationship?

A. There is no certain relationship between the yield to maturity and the current yield.

B. If a bond sells for its par value, the yield to maturity is greater than the current yield.

C. If a bond sells at a discount, the yield to maturity is greater than the current yield.

D. If a bond sells at a premium, the yield to maturity is greater than the current yield

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