A $1,000 Par Value Bond Sells for $1,216

question 97

Multiple Choice

A $1,000 par value bond sells for $1,216. It matures in 20 years, has a 14 percent coupon, pays interest semiannually, and can be called in 5 years at a price of $1,100. Calculate the bond's yield to maturity. 

• A)6.05%
• B)10.00%
• C)10.06%
• D)8.59%
• E)11.26%

---

Definitions:

Net Operating Income

Net Operating Income (NOI) is a measure of a company's profitability from its core business operations, excluding expenses and revenues from financing and investing activities.

Absorption Costing

Absorption costing is an accounting method that includes all manufacturing costs—direct materials, direct labor, and both variable and fixed manufacturing overhead—in the cost of a product.

Net Operating Income

A measure of a company's profitability from its core business operations, excluding deductions of interest and taxes.

Absorption Costing

A costing method that includes all manufacturing costs - both fixed and variable - in the cost of a product.