What Is the Yield to Maturity of a Corporate Bond

question 31

Multiple Choice

What is the yield to maturity of a corporate bond with 13 years to maturity,a coupon rate of 8% per year,a $1,000 par value,and a current market price of $1,250? Assume semiannual coupon payments.

• A) 4.2%
• B) 4.7%
• C) 6.0%
• D) 5.3%

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Definitions:

Gross Domestic Product (GDP)

The total monetary value of all final goods and services produced within a country's borders in a specific time period, serving as a broad measure of national economic activity.

Expansions

Phases in the business cycle where the economy is growing and real GDP is increasing.

Recessions

Phases of short-term economic downturn characterized by decreased commerce and manufacturing, typically marked by a reduction in Gross Domestic Product (GDP) for two consecutive quarters.

Interest Rates

The cost of borrowing or the reward for saving, often expressed as a percentage of the principal amount per annum.