SIE practice questionhardYield Calculations
A 7% bond maturing in 12 years is priced at 94. What best describes its yield relationships?
- ACoupon > current yield > YTM
- BYTM > current yield > coupon✓ Correct answer
- CCurrent yield > YTM > coupon
- DYTM = current yield = coupon
Explanation
Why B — YTM > current yield > coupon
At a discount, YTM exceeds current yield, which exceeds coupon rate. When at a premium, the order reverses.
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