A Bond Quoted at a Price of 101.2

question 20

Multiple Choice

A bond quoted at a price of 101.2

• A) is a deep discount bond.
• B) yields 10.12%.
• C) yields 12%.
• D) has a coupon rate that exceeds the market rate.

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Definitions:

Semi-Annually

Semi-annually refers to an event or action occurring twice a year, typically every six months.

Real Rate Of Return

The yearly return percentage on an investment, modified for price level changes caused by inflation or other external factors.

Nominal Rate

The nominal rate is the interest rate set by the lending institution, not adjusted for inflation, representing the face value of the interest rate.

Inflation

An upward trend in the cost of goods and services, which lowers the effectiveness of buying power.