If the Price of a Two-Year Semi-Annual Pay Bond Is

question 13

Multiple Choice

If the price of a two-year semi-annual pay bond is par (say,$100) ,and the coupon on the bond is 6%,the yield-to-maturity expressed with semi-annual compounding is

• A)5.87%
• B)5.96%
• C)6.00%
• D)6.12%

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Definitions:

Mental Effort

The amount of cognitive resources required to perform a task or understand a concept.

Introspective

A reflective process where an individual examines their own thoughts, feelings, and motives.

A Priori

Knowledge or justification that is independent of experience, typically involving logical reasoning or deduction.

Cognitive Misers

A theory suggesting individuals prefer to minimize mental effort in decision making and problem solving, relying on heuristics and shortcuts.