Omega Software Corporation's Bond with a Face Value of $1,000

question 27

Multiple Choice

Omega Software Corporation's bond with a face value of $1,000 is currently selling at a premium in the financial markets. If the bond's yield to maturity is 11.5 percent, then the bond's:

• A) coupon rate of interest will be less than 11.5 percent.
• B) coupon rate of interest will be greater than 11.5 percent.
• C) coupon rate of interest will be equal to 11.5 percent.
• D) maturity value will be greater than $1,000.
• E) maturity value will be less than $1,000.

---

Definitions:

Risk-Free Return

The theoretical return on an investment with zero risk, typically represented by government securities like Treasury bills.

Beta

A measure of a stock's volatility in relation to the overall market; a beta greater than 1 indicates higher than market volatility.

Treynor Measure

A performance metric for determining how well an investment compensates the investor for the risk taken, considering systematic risk.

Risk-Free Return

The theoretical return of an investment with zero risk, often represented by the yield of government bonds like U.S. Treasury bonds.