You Are Considering Two Bonds

question 42

Multiple Choice

You are considering two bonds.Both have semi-annual,8 percent coupons,$1,000 face values,and yields to maturity of 7.5 percent.Bond S matures in 4 years and Bond L matures in 8 years.What is the difference in the current prices of these bonds?

• A) $10.51
• B) $11.33
• C) $11.52
• D) $12.67
• E) $12.88

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Definitions:

Internal Oblique

A muscle layer in the abdomen that helps in trunk rotation and bending the body sideways.

External Oblique

A muscle in the abdomen that helps rotate the trunk and flex the vertebral column.

Scapula

The flat, triangular bone located in the upper back, commonly known as the shoulder blade.

Rhomboid Major

A skeletal muscle located in the upper back that connects the spine to the shoulder blade, aiding in retraction of the scapula.