A Coupon Bond Which Pays Interest of 4% Annually, Has

question 27

Multiple Choice

A coupon bond which pays interest of 4% annually, has a par value of $1 000, matures in 5 years, and is selling today at $785. The actual yield to maturity on this bond is ________.

• A)7.2%
• B)8.8%
• C)9.1%
• D)9.6% $785 = $40

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Definitions:

Accounts Payable

The amount of money that a company owes to its suppliers or creditors for goods or services received.

Checking Account

A bank account allowing the account holder to deposit and withdraw funds, often through the issuance of checks.

Leasing Companies

Companies that provide leasing services, allowing individuals or other businesses to use assets for a specified period in exchange for regular payments.

Tax Agencies

Governmental organizations responsible for administering and collecting taxes.