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A bond has 15 years to maturity and an annual coupon of 12%. The face value...

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Finance

A bond has 15 years to maturity and an annual coupon of 12%. Theface value of the bond is $1,000 and coupon payments are madesemiannually. The bond is currently trading in the market at $880.What can you say about the YTM on this bond?

Answer provided: The YTM is greater than 12%

Why, what is the formula or rule behind this answer?

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A bond has 15 years to maturity and an annual coupon of 12%. Theface value of the bond is $1,000 and coupon payments are madesemiannually. The bond is currently trading in the market at $880.What can you say about the YTM on this bond?Answer provided: The YTM is greater than 12%Why, what is the formula or rule behind this answer?

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