Given the Bond Described Above, If Interest Were Paid Semi-Annually

question 20

Multiple Choice

$\begin{array}{ll} \text { Par value } &\$1,000\\ \text { Time to Maturity } &20 \text { Years } \\ \text { Coupon} &10 \% \text { (paid annually) }\\ \text { Current price } &\$850\\ \text {Yield to Maturity } &12\%\\\end{array}$
Given the bond described above, if interest were paid semi-annually (rather than annually) , and the bond continued to be priced at $850, the resulting effective annual yield to maturity would be

• A) less than 12%.
• B) more than 12%.
• C) 12%.
• D) Cannot be determined.
• E) None of the options are correct.