Given the Bond Described Above, If Interest Were Paid Semi-Annually

question 21

Multiple Choice

Given the bond described above, if interest were paid semi-annually (rather than annually) , and the bond continued to be priced at $850, the resulting effective annual yield to maturity would be $\begin{array}{lc}\text { Par Value } & \$ 1,000 \\\text { Time to Maturity } & 20 \text { Years } \\\text { Coupon } & 10 \% \text { (paid annually) } \\\text { Current price } & \$ 850 \\\text { Yield to Maturity } & 12 \%\end{array}$

• A) less than 12%.
• B) more than 12%.
• C) 12%.
• D) Cannot be determined.
• E) None of the options are correct.

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Definitions:

Possessory Lien

A legal right or interest that a lender or storage facility has in the item in possession, as security for payment of a debt or charge.

Rug Repairer

A professional specialized in fixing and restoring rugs to their original condition.

Innkeeper's Lien

A legal right allowing innkeepers to hold, or even sell, a guest's property as security for unpaid lodging bills.

Statutory Lien

A right to keep possession of property belonging to another until a debt owed by that person is discharged, created by statute.