A Bond Is Currently Selling for 112% of Par and Has

question 19

Multiple Choice

A bond is currently selling for 112% of par and has 16 years to maturity. The bond pays interest semiannually. The coupon rate is 9.4 percent, and the bond is callable in 4 years at a premium of $90. What is the yield to call of the bond if it has a par value of $1,000?

• A) 8.37%
• B) 8.42%
• C) 7.45%
• D) 7.95%
• E) 8.16%

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Definitions:

General Level

A term that might refer to the overall state or condition of something, but not a specific financial term.

Prices For Goods

The amount of money required to purchase products, which can fluctuate based on factors like supply, demand, and inflation.

Interest Rates

The amount charged by a lender to a borrower for the use of assets, usually expressed as a percentage of the principal.

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The outlays made by firms, government, or individuals to purchase goods and services that can create future benefits.