Consider a bond with a 10% coupon and with yield to maturity = 8%. If the bond's YTM remains constant, then in one year, will the bond price be higher, lower, or unchanged? Please explain your answer and give examples to help demonstrate your explanation.
Lower. All else equal, the price of a bond is inversely related to time to maturity.... View the full answer
- I think is higher
- Apr 04, 2018 at 3:06pm
- Clarification: That would be for a bond selling at discount. It will rise during the consequent year to a maturity value of $1000 or the par given.
- Apr 04, 2018 at 3:10pm