What Is the Price Today of a Two-Year,default-Free Security with a Face

question 56

Essay

What is the price today of a two-year,default-free security with a face value of $1000 and an annual coupon rate of 5.75%? Does this bond trade at a discount,premium,or at par?

---

Definitions:

Stimulus Generalization

The process in which a response to a specific stimulus becomes associated with other stimuli that are similar, leading to the same response.

Conditioned Stimulus

A stimulus that initially has no effect but becomes able to provoke a specific response through association with an unconditioned stimulus.

Extinction

In psychology, the process through which a conditioned response decreases or disappears as a consequence of repeated exposure to the conditioned stimulus without the unconditioned stimulus.

Stimulus Discrimination

The learned ability to distinguish between a conditioned stimulus and other stimuli that have not been paired with an unconditioned stimulus.