The Yield-To-Maturity on a Bond Is the Interest Rate You

question 46

Multiple Choice

The yield-to-maturity on a bond is the interest rate you earn on your investment if interest rates do not change.If you actually sell the bond before it matures,your realized return is known as the holding period yield.Suppose that today,you buy a 12 percent annual coupon bond for $1,000.The bond has 13 years to maturity.Two years from now,the yield-to-maturity has declined to 11 percent and you decide to sell.What is your holding period yield?

• A)8.84 percent
• B)9.49 percent
• C)12.00 percent
• D)13.01 percent
• E)14.89 percent

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Definitions:

Celebrity Endorser

A famous person who promotes or publicly supports a product, service, or brand.

Sleeper Effect

A phenomenon where a message that was initially discounted or ignored gains persuasiveness over time.

Message Source

The originator of a communication or information that is being conveyed to an audience.

Match-up Hypothesis

The theory suggesting that the effectiveness of an endorsement depends on the compatibility between the endorser and the product or brand being endorsed.