The Price Perpetual Bank Has Purchased a Bond That Has

question 54

Multiple Choice

The Price Perpetual Bank has purchased a bond that has a coupon rate of 5.5% and a face value of $1000.It has 11 years to maturity and is currently selling in the market for $887.52.The bond makes annual coupon payments.What is the yield-to-maturity on this bond?

• A)7%
• B)5.5%
• C)11%
• D)4.70%
• E)None of the options is correct

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Definitions:

LLC's

Stands for Limited Liability Companies, a business structure in the U.S. that offers personal liability protection to its owners but can be taxed as a partnership.

S Corporations

A special designation of corporation that allows income to be taxed only at the shareholder level, avoiding double taxation.

Flow-Through Entities

Entities through which income flows to the owners or investors, avoiding corporate income tax.

Schedule E

A tax form used to report income and losses from rental real estate, royalties, partnerships, S corporations, estates, trusts, and residual interests in REMICs.