1. You own a bond that has a 7% coupon and matures in 12 years. You purchased this bond at par value when it was originally issued. If the current market rate for this type and quality of bond is 7.5%, then you would expect:
A. the current yield today to be less than 7%.
B. today's market price to exceed the face value of the bond.
C. the bond issuer to increase the amount of each interest payment on these bonds.
D. to realize a capital loss if you sold the bond at the market price today.
E. the yield to maturity to remain constant due to the fixed coupon rate.
2. The principal amount of a bond that is repaid at the end of the loan term is called the bond's:
A. yield to maturity.
B. coupon rate.
C. coupon.
D. face value.
E. maturity.