In 2000 Jenson Inc issued bonds with an 8 percent coupon rate and a $1,000 face value. The bonds

mature on March 1, 2025.

If an investor purchased one of these bonds on March 1, 2012, determine
the yield to maturity if the investor paid $1,100 for the bond.
A) The yield to maturity must be greater than 8% because the price paid for the bond exceeds the
face value.
B) 7%
C) The yield to maturity is $900 ($1,000 interest less $100 capital loss).
D) 5.4%

B