You Turn to the Bond Market Page of a Newspaper

question 61

Multiple Choice

You turn to the bond market page of a newspaper and look under the column headed "Bonds" and see that it says,"Alpha 7 1/2 25" this information indicates that

• A) the coupon rate on this bond is 7.5 percent.
• B) the year this bond matures is 2025.
• C) the current yield on this bond is 7.5 percent.
• D) the current yield on this bond has risen 0.25 percent since the previous trading day.
• E) a and b

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Definitions:

Earn

To earn is to receive money or its equivalent in return for labor, services, or investments made.

Present Value

A calculation that determines the current worth of a future sum of money or stream of cash flows, given a specific rate of return.

Annuity

A fiscal product offering a consistent payout pattern, mainly aimed at supplying funds for individuals in retirement.

Discount Rate

In DCF analysis, the interest rate employed to find out the present value of cash flows expected in the future.