What Is the Yield-To-Maturity (YTM)of a Four-Year Semi-Annual Pay Bond

question 74

Multiple Choice

What is the yield-to-maturity (YTM) of a four-year semi-annual pay bond with a par value of $1,000 and a 4% coupon rate when the bond is currently priced at $932.35?

• A)2.96%
• B)5.92%
• C)5.95%
• D)11.90%

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Definitions:

Diversification

The strategy of spreading investments among different financial instruments, industries, or other categories to reduce risk.

Portfolio Risk

Describes the uncertainty or variability of returns associated with a portfolio of investments, highlighting the combined risk of individual assets.

Systematic Risk

The risk inherent to the entire market or an entire market segment, which cannot be mitigated through diversification.

Asset Specific Risk

The risk of loss associated with a particular asset, different from market risk.