Barkstone Candies Bonds Have a Face Value of $1,000 and a Current

question 309

Multiple Choice

Barkstone Candies bonds have a face value of $1,000 and a current market price of $1,047.20. The bonds have a 6% coupon rate. What is the current yield on these bonds?

• A) 2.53%
• B) 2.86%
• C) 5.73%
• D) 6.0%
• E) 11.46%

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Definitions:

Great Depression

A severe worldwide economic downturn that took place during the 1930s, marked by widespread unemployment, poverty, and deflation.

Laffer Curve

A curve illustrating the relationship between the tax rate and tax revenues. Tax revenues will be low at both very high and very low tax rates. When tax rates are quite high, lowering them can increase tax revenue.

Tax Revenues

The income that is gained by governments through taxation.

Marginal Tax Rates

The rate of tax that applies to the next dollar of taxable income above a pre-determined threshold.