The Price on a Treasury Bond Is 104:21 with a Yield

question 56

Multiple Choice

The price on a treasury bond is 104:21 with a yield to maturity of 3.45%.The price on a comparable maturity corporate bond is 103:11 with a yield to maturity of 4.59%.What is the approximate percentage value of the credit risk of the corporate bond?

• A) 1.14%
• B) 3.45%
• C) 4.59%
• D) 8.04%

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Definitions:

Par Value

A nominal value given to a security or stock specified by the issuing company, which may not necessarily reflect its actual market value.

Dividends Payable

A liability account that records the amount of dividends that a company has declared but not yet paid to its shareholders.

Cash

denotes money in the form of currency, including banknotes and coins, which is used to conduct transactions.

Stockholders' Equity

The residual interest in the assets of a corporation after deducting liabilities, representing the ownership interest of shareholders in the company.