Suppose a Five-Year Bond with a 7% Coupon Rate and Semiannual

question 40

Multiple Choice

Suppose a five-year bond with a 7% coupon rate and semiannual compounding is trading for a price of $951.58.Expressed as an APR with semiannual compounding,this bond's yield to maturity (YTM) is closest to:

• A)7.0%.
• B)7.5%.
• C)7.8%.
• D)8.2%.

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Definitions:

Transfer Warranty

A guarantee in legal documents, especially in sales of goods, assuring the recipient that the transferor has valid title and that the transfer is rightful.

Presentment Warranty

Assurance given in a transaction that certain facts are true as of the time of the deal, generally related to financial instruments.

Draft

A preliminary version of a document, plan, or design that is open for discussion, revision, or improvement.

Forged

Refers to the illegal creation, alteration, or imitation of documents, signatures, or objects with the intent to deceive.