Suppose You Have a 10%,20 Year Bond Traded at $1,120

question 48

Multiple Choice

Suppose you have a 10%,20 year bond traded at $1,120.If it is callable in 5 years at $1,150,what is the bond's approximate yield to call? Interest is paid quarterly.

• A) 7.78%
• B) 8.00%
• C) 9.40%
• D) 9.36%
• E) 9.72%

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Definitions:

Change in Price

A variation in the cost of a good or service over a period which can affect demand and supply dynamics in the market.

Price of X

The amount of money required to purchase a specified good or service, indicated here as "X."

Buyer's Budget

The total amount of money that a consumer is willing and able to spend on goods and services within a certain period.

Indifference Curve

A graph representing different bundles of goods between which a consumer is indifferent, showing preferences in terms of trade-offs.