Which of the following $1,000 face value bonds has a 10% yield, assuming semiannual coupon payments of 8%?
1) A 5 year maturity bond selling for $964.54
2) A 10 year maturity bond selling for $875.39
3) A 20 year maturity bond selling for $828.36

A) (1)
B) (2)
C) (3)
D) (2) and (3)

Semiannual Coupon

Interest payments made to bondholders twice a year.

Yield

The income return on an investment, such as the interest or dividends received, typically expressed as an annual percentage of the investment cost.

Maturity Bond

A bond at the end of its term, at which point the principal amount is due to be paid back to the bondholder.