suppose the current price of a premiumm bond with ten years
suppose the current price of a premiumm bond with ten years to maturity is $1125.07. which could not be the price of the premium bond six years from today assuming that the current YTM doesnt change over time? 1015 ? 1045? 1075? 1105? or 1135?
Solution
1135 is correct
we are given that bond with 10 years , price is 1125.07
so any time less than 10 years . price can no increase from 1125.07 ,9YTM is constant)
since 1135 > 1125.07 ,
this can not be price for bond after 6 years.
