Finance Unit 2
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MacroMedia Inc. $1,000 par value bonds are selling for $1,265. Which of the following statements is TRUE?
A) The bond market currently requires a rate (yield) less than the coupon rate. B) The bonds are selling at a premium to the par value. C) The coupon rate is greater than the yield to maturity.
The ________ is the annual coupon payment divided by the current price of the bond, and is not always an accurate indicator.
current yield
The ________ is the yield an individual would receive if the individual purchased the bond today and held the bond to the end of its life.
yield to maturity