A Bond Has a Par Value of $1,000,a Market Price

question 77

Multiple Choice

A bond has a par value of $1,000,a market price of $1,012,and a coupon rate of 5.75 percent.What is the current yield?

• A)5.68 percent
• B)5.71 percent
• C)5.75 percent
• D)5.78 percent
• E)5.80 percent

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Definitions:

Reserve Requirement

The minimum amount of reserves that banks must hold, either in their vaults or with the central bank, as a proportion of deposits.

Excess Reserves

The surplus funds that banks hold over the required minimum set by the central bank to meet unexpected withdrawals.

Deposits

Funds stored in a bank or similar entity for security purposes that have the potential to accrue interest as time passes.

Reserve Requirement

The minimum amount of funds that a bank must hold in reserve against deposit liabilities, set by the central bank.