Bond concepts Answer: d Diff: M
39. A 10-year bond has a 10 percent annual coupon and a yield to maturity of 12 percent. The bond can be called in 5 years at a call price of $1,050 and the bond’s face value is $1,000. Which of the following statements is most correct?
a. The bond’s current yield is greater than 10 percent.
b. The bond’s yield to call is less than 12 percent.
c. The bond is selling at a price below par.
d. Statements a and c are correct.
e. None of the statements above is correct.
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