A $1,000 Face Value Bond Has a 7

question 48

Multiple Choice

A $1,000 face value bond has a 7.85 percent semi-annual coupon and sells for $982.50. What is the current yield?

• A) 7.75 percent
• B) 7.82 percent
• C) 7.89 percent
• D) 7.99 percent
• E) 7.61 percent

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Definitions:

CCA Class

Stands for Capital Cost Allowance Class, which is a categorization used in Canadian tax law for the purpose of calculating depreciation for tax purposes.

Borrowed Money

Funds that are loaned to an individual or business with an obligation to repay the amount plus interest.

Operating Lease

A lease agreement allowing the use of an asset without ownership, typically involving shorter-term rentals.

Residual Value

The estimated value that an asset will have at the end of its useful life.