The YTM of a 4-Year Default-Free Security with a Face

question 7

Multiple Choice

The YTM of a 4-year default-free security with a face value of $1000 and an annual coupon rate of 5.25% is closest to:

• A)5.2%.
• B)5.0%.
• C)4.9%.
• D)5.25%.

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Definitions:

Mandibular

Pertaining to the mandible or lower jawbone.

Maxillary

Pertaining to the maxilla or the upper jawbone, which holds the upper teeth and plays a key role in the formation of the roof of the mouth, the floor of the orbit, and the sides and floor of the nasal cavity.

Maxilla

The upper jawbone, forming the central part of the face above the mouth.

Meniscus

A crescent-shaped fibrocartilaginous structure in the knee that acts as a shock absorber between the thigh bone and the shin bone.