A $1,000 Par Value Bond Is Currently Valued at $1,033

question 15

Multiple Choice

A $1,000 par value bond is currently valued at $1,033.53. The bond pays interest semi-annually, has 6 years to maturity, and has a yield to maturity of 7.3 percent. The coupon rate is _____ percent and the current yield is _____ percent.

• A) 6.80; 7.21
• B) 8.00; 7.74
• C) 8.00; 7.81
• D) 8.50; 8.22
• E) 8.50; 8.30

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Definitions:

Probability

A quantification of the chance of an event taking place, assigned a value between 0, which denotes that the event is impossible, and 1, which denotes absolute certainty of the event happening.

Uniform Distribution

A type of probability distribution where all outcomes are equally likely over a certain range.

Electronics Test

A process or methodology applied to identify the functionality, reliability, and performance of an electronic device or system.

Median Waiting Time

The middle value in a dataset of waiting times, which divides the distribution into two equal halves, indicating that half of the waiting times are above this value and half are below it.