A 725 Percent Coupon Bond with 25 Years Left to Maturity

question 80

Multiple Choice

A 7.25 percent coupon bond with 25 years left to maturity is priced to offer a 7 percent yield to maturity. You believe that in one year, the yield to maturity will be 7.15 percent. If this occurs, what would be the total return of the bond in percent? (Assume semiannual interest payments and $1,000 par value.)

• A) 3.5 percent
• B) 5.3 percent
• C) 7.0 percent
• D) 7.15 percent

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Definitions:

Psychogenic Needs

Emotional and psychological needs that motivate individuals to perform actions or pursue goals for personal satisfaction.

A Priori Needs

Needs or requirements that are understood or established prior to a project or assessment, based on theoretical deduction rather than empirical evidence.

Actualization Needs

The highest level in Maslow's hierarchy of needs, focusing on realizing personal potential, self-fulfillment, and seeking personal growth.

Drive Theory

A psychological theory that suggests motivation is driven by an individual's desire to fulfill basic physiological needs and reduce internal tensions.