A $5,000 Face Value Municipal Bond Matures in 12 Years

question 23

Multiple Choice

A $5,000 face value municipal bond matures in 12 years and is priced at $4,850.The coupon rate is 5.5 percent with interest paid semiannually.What is the yield to maturity on the bond?

• A) 4.77 percent
• B) 5.14 percent
• C) 5.40 percent
• D) 5.61 percent
• E) 5.85 percent

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Definitions:

Ammonia

A colorless gas with a pungent smell, composed of nitrogen and hydrogen (NH3), used widely as a fertiliser and industrial feedstock.

Propanoic Acid

A short-chain fatty acid with the formula C2H5COOH, known for its unpleasant odor similar to body sweat.

Methyl Propanoate

An ester formed from methanol and propanoic acid, often used as a solvent or in the synthesis of other compounds.

Methods

Systematic approaches or techniques used to accomplish a task, solve problems, or conduct research.