The Next Questions Refer to the Following

question 6

Multiple Choice

The next questions refer to the following.
A five-year bond is to be issued with a face value of $1,000 and a coupon rate of 5%.
-After two years have elapsed,the bond's price should be

• A) $898.75
• B) $812.00
• C) $789.92
• D) $715.63
• E) $687.94

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Definitions:

Coupon Bonds

Debt securities that pay periodic interest payments based on a fixed interest rate (coupon) until maturity, at which point the principal is repaid.

Yield To Maturity

The total return anticipated on a bond if it is held until its maturity date.

Market Price

The market's ongoing price for the transaction of assets or services.

Basis Point

A unit of measure used in finance to describe the percentage change in value or rate of a financial instrument, equal to 1/100th of 1%.