A 4-Year Default-Free Security with a Face Value of $1000

question 64

Multiple Choice

A 4-year default-free security with a face value of $1000 and an annual coupon rate of 5.25% will trade:

• A)at a premium.
• B)at par.
• C)at a discount.
• D)There is insufficient information provided to answer this question.

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Definitions:

Wilcoxon Test Statistic

A non-parametric test statistic used to compare two paired groups, assessing whether their population mean ranks differ.

Two-Tail

Refers to a type of hypothesis test that considers both directions of difference or effect, looking for deviations in two opposite directions.

Level Of Significance

The probability threshold below which a result is considered statistically significant.

Nonparametric Tests

Statistical tests that do not assume a specific distribution for the data, often used when parametric test assumptions cannot be satisfied.