What Is the Yield to Maturity of a Five-Year,$5000 Bond

question 61

Multiple Choice

What is the yield to maturity of a five-year,$5000 bond with a 4.5% coupon rate and semiannual coupons if this bond is currently trading for a price of $4876?

• A)4.30%
• B)5.07%
• C)6.30%
• D)8.60%

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Definitions:

Cumulative Probability

The probability that a random variable takes on a value less than or equal to a specific value, aggregating across all previous probabilities.

Random Number Intervals

The ranges between which randomly generated numbers fall, used in simulations and probabilistic analyses.

EOQ Methodology

The Economic Order Quantity method calculates the optimal order size to minimize the costs of holding inventory and stock ordering, balancing demand with inventory costs.