Which of the Following $1,000 Face-Value Securities Has the Highest

question 11

Multiple Choice

Which of the following $1,000 face-value securities has the highest yield to maturity?

• A) A 5 percent coupon bond with a price of $600
• B) A 5 percent coupon bond with a price of $800
• C) A 5 percent coupon bond with a price of $1,000
• D) A 5 percent coupon bond with a price of $1,200

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Definitions:

Common Stock

Stock whose owners have voting rights in the corporation, yet do not receive preferential treatment regarding dividends.

Commercial Paper

An unsecured, short-term debt instrument issued by corporations, typically used for the financing of payroll, accounts payable, inventories, and meeting other short-term liabilities.