The YTM of a 3-Year Default-Free Security with a Face

question 112

Multiple Choice

The YTM of a 3-year default-free security with a face value of $1000 and an annual coupon rate of 6% is closest to:

• A)5.5%.
• B)5.8%.
• C)5.7%.
• D)5.2%.

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Definitions:

Cost-Plus-Percentage-Of-Cost Pricing

A pricing method where the seller determines the price by adding a specific percentage of the production cost per unit on top of the total cost to ensure profit.

Real Estate

Property consisting of land and the buildings on it, along with its natural resources such as crops, minerals, or water.

Power Company

An entity that generates, transmits, and distributes electricity to consumers and businesses within a specific area or region.

Cost-Oriented Approach

A pricing strategy where the price of a product is determined based on the cost of production plus a markup percentage for profit.