A Bond with a Par Value of $1,000 Has Annual

question 100

Multiple Choice

A bond with a par value of $1,000 has annual interest payment of $85. The bond currently sells for $850 and has 8 years to maturity. Which of the following is true?

• A) The current yield on the bond must be 8.5%.
• B) The investor's required rate of return must be 8.5%.
• C) The coupon rate must be 8.5%.
• D) The yield-to-maturity must be 8.5%.

---

Definitions:

Psychoanalytic

Relates to a theory and therapeutic approach developed by Sigmund Freud that emphasizes unconscious motivations and conflicts as drivers of human behavior.

Psychosexual Stage

A concept in Freudian psychology that describes a series of developmental stages in childhood, each characterized by the erogenous zone that is the source of a child's psychosexual energy.

Latency Stage

A phase in Freudian psychosexual development occurring between the ages of six and puberty, characterized by a decrease in sexual interest and increase in same-sex friendships.

Oral Stage

The first stage in Freud's psychosexual development theory, occurring in the first year of life, where the mouth is the primary source of pleasure and exploration.