A bond with a 9% coupon maturing in 10 years is trading at 950 (face value = 1000). Is it possible to draw the yield curve of this bond with the given information?
A single bond doesn’t have a yield curve.
You need a set of bonds covering the span of possible maturities to create a yield curve.
Would it be absurd if I construct various yields for the tenure of the bond (assuming redemption at par at t1, t2… so on till T)? I would get a list of yields which begins high and ends low (downward sloping in that sense…). I had seen such a construct in a solutions book (not CFA), but it doesn’t seem meaningful.
Was wondering if I am missing something.
That would not make any sense, because the bond isn’t priced to be redeemed at any early date.
Got it. Thank you.