The Above Table Shows the Yields to Maturity on a Number

question 18

Multiple Choice

The above table shows the yields to maturity on a number of three-year, zero-coupon securities. What is the price per $100 of the face value of a three-year, zero-coupon corporate bond with a BBB rating?

• A)$99.06
• B)$115.57
• C)$82.55
• D)$66.04

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Definitions:

Secured Bonds

Bonds backed by the issuer's pledge of specific assets as collateral to ensure repayment, making them less risky for investors.

Market Rate

The interest rate available to borrowers and savers in the overall or specific marketplace, often influenced by supply and demand, central bank policy, or other factors.

Premium on Bonds

The amount by which the selling price of a bond exceeds its face value.

Callable Bonds

Bonds that can be redeemed by the issuer before their maturity date at a set price, giving issuers flexibility to refinance if interest rates fall.