A Company Issues a Ten-Year $1,000 Face Value Bond at Par

question 6

Multiple Choice

A company issues a ten-year $1,000 face value bond at par with a coupon rate of 6.1% paid semiannually. The YTM at the beginning of the third year of the bond (8 years left to maturity) is 8.1%. What is the new price of the bond?

• A) $883.91
• B) $1060.69
• C) $1237.47
• D) $1,000.00

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Definitions:

Commission Rate

The percentage of a sale price paid to the individual or entity that facilitated the sale.

Graduated Commission

A commission structure where the rate increases with the volume or value of sales achieved.

Commission Rate

The percentage or fixed payment rate applied to transactions, typically used to compensate salespeople.

Graduated Commission

A commission structure where the rate of commission increases with the level of sales achieved, incentivizing higher sales performance.