You Just Purchased a 10-Year Corporate Bond That Has an Annual

You just purchased a 10-year corporate bond that has an annual coupon of 10 percent. The bond sells at a premium above par. Which of the following statements is most correct?

A) The bond's yield to maturity is less than 10 percent.
B) The bond's current yield is greater than 10 percent.
C) If the bond's yield to maturity stays constant, the bond's price will be the same one year from now.
D) Statements a and c are correct.
E) None of the answers above is correct.

Correct Answer:

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