Suppose a three-year government bond has a face value of 1000 and a coupon rate of 6% paid annually. Its market price is 965.23. Which of the following statements is true:

Question

Suppose a three-year government bond has a face value of 1000 and a coupon rate of 6% paid annually.  Its market price is 965.23. Which of the following statements is true:

Accepted Answer

The yield to maturity on the bond will be more than 6% because investors in the bond will make a capital gain should they buy and hold it until maturity

Answer

The yield to maturity on the bond will be less than 6% because investors in the bond will make a capital gain should they buy and hold it until maturity

Answer

The yield to maturity on the bond will be less than 6% because investors in the bond will face a capital loss should they buy and hold it until maturity

Answer

The yield to maturity on the bond will be more than 6% because investors in the bond will face a capital loss should they buy and hold it until maturity

Crowdly

Suppose a three-year government bond has a face value of 1000 and a coupon rate ...

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