Ask Experts Questions for FREE Help!
 
Free Answers in 3 Easy Steps

Register Now		 3 Steps
 
Ask QuestionsprogressAnswer QuestionsprogressBuild ReputationprogressBecome an Expert
 
At Ask Me Help Desk you can ask questions in any topic and have them answered for free by our experts. To ask questions or participate in answering them you must register for a free account. By registering you will be able to:
  • Get free answers from experts in any of our 300+ topics.
  • Accept money for answers that you provide.
  • Communicate privately with other members (PM).
  • See fewer ads.
  Answer this Question    Ask about Accounting    Ask about another Subject  
 
PDA

daddybcat
May 22, 2007, 08:48 AM
A coworker of yours was discussing her investments with a broker. Your coworker was confused because she had purchased a 10% bond but the broker kept repeating that it had a 9% yield to maturity.
goldenbutterfly
May 22, 2007, 10:20 PM
The 10% bond is the coupon rate stated on the face of the bond. She will be receiving 10% return on the face value of the bond on every interest payment date. However, due to effects of supply and demand and the timing of the purchase, she may be paying a discount or a premium on the bonds. If she will be paying a premium, she will be getting a yield to maturity that is lower than the 10% coupon rate, which at this instance is 9%.