You Are Considering Two Bonds

question 42

Multiple Choice

You are considering two bonds.Both have semi-annual,8 percent coupons,$1,000 face values,and yields to maturity of 7.5 percent.Bond S matures in 4 years and Bond L matures in 8 years.What is the difference in the current prices of these bonds?

• A) $10.51
• B) $11.33
• C) $11.52
• D) $12.67
• E) $12.88

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Definitions:

Measuring

The process of quantitatively determining the size, length, quantity, or capacity of something using defined units.

Objects

Items, things, or entities that can be seen, touched, or otherwise sensed.

Size Constancy

The tendency to perceive objects as being the same size even though the sizes of their images on the retina may differ as a result of distance.

Infants

Young babies, typically under one year of age, who are in the earliest stage of human life, characterized by rapid physical and cognitive development.