Find the Yield-To-Maturity of a 5% Two-Year Bond That Has

question 8

Multiple Choice

Find the yield-to-maturity of a 5% two-year bond that has a price of $102.Assume coupons are paid quarterly.

• A)4.33%
• B)4.44%
• C)4.55%
• D)4.66%

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Definitions:

Marginal Rate of Substitution

The speed at which a consumer is prepared to exchange one product for another while keeping their overall satisfaction constant.

Utility Maximizing

The process or behavior of consumers attempting to get the greatest amount of satisfaction from their consumption choices, subject to their income and the prices of goods and services.

Consumption Map

A graphical representation showing different combinations of goods or services that provide equal satisfaction or utility to a consumer.

Budget Line

The budget line represents the combinations of two goods that a consumer can purchase with a given budget, taking into account the prices of the goods.