Tony's Pizzeria Plans to Issue Bonds with a Par Value

question 58

Multiple Choice

Tony's Pizzeria plans to issue bonds with a par value of $1,000 and 10 years to maturity.These bonds will pay $45 interest every 6 months.Current market conditions are such that the bonds will be sold to net $937.79.What is the YTM of the issue as a broker would quote it to an investor?

• A) 11%
• B) 10%
• C) 9%
• D) 8%
• E) 7%

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Definitions:

Lever

A simple machine consisting of a rigid bar that pivots on a fixed point, used to transfer force and change the direction of force.

Variable Interval

Variable interval refers to a reinforcement schedule in which rewards are given after unpredictable time intervals, used in behavioral conditioning.

Reinforcement

In psychology, a process by which a stimulus increases the probability of a response through either positive or negative reinforcement.

Response

A reaction to a specific stimulus or set of stimuli, which can be observable behavior or internal processes.