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

question 25

Multiple Choice

A company issues a ten-year $1,000 face value bond at par with a coupon rate of 6.7% paid semiannually. The YTM at the beginning of the third year of the bond (8 years left to maturity) is 8.1%. What was the percentage change in the price of the bond over the past two years?

• A) -6.50%
• B) -9.75%
• C) -8.13%
• D) -11.38%

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Definitions:

Vestibulocochlear Nerve

The eighth cranial nerve that transmits sound and equilibrium (balance) information from the inner ear to the brain.

Auditory Tube

Also known as the Eustachian tube, it connects the middle ear to the nasopharynx and helps equalize pressure between the middle ear and the atmosphere.

Seasonal Inventory

Inventory stockpiled in anticipation of seasonal demand peaks to ensure adequate supply and optimal service levels.

Demand

The desire and willingness of consumers to purchase goods or services at a given price over a specific time period.