Suppose you have just bought a 30-year, 8% semiannual coupon bond. Your purchasi

Question

Suppose you have just bought a 30-year, 8% semiannual coupon bond.  Your purchasing price of the bond implies that the current YTM is 9%.  Which of the followings is NOT true?

Your purchasing price of the bond was below the par.

You will receive a $40 coupon payment every six month.

You would earn 8% rate of return if you hold this bond until the maturity.

Your purchasing price of the bond was below the par.

The associated cash flows are an annuity during the 30 year period and a lump sum at the end.

You will receive a $40 coupon payment every six month.

You would earn 8% rate of return if you hold this bond until the maturity.

Explanation / Answer

You would earn 8% rate of return if you hold this bond until the maturity.

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