Use the Information for the Question(s)below

question 107

Multiple Choice

Use the information for the question(s) below.
The Sisyphean Company has a bond outstanding with a face value of $1000 that reaches maturity in 15 years.The bond certificate indicates that the stated coupon rate for this bond is 8% and that the coupon payments are to be made semiannually.
-Assuming the appropriate YTM on the Sisyphean bond is 7.5%,then this bond will trade at:

• A)par.
• B)a discount.
• C)a premium.
• D)None of the above

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Definitions:

Exchange Rate

The exchange rate specifies how much one currency can be traded for another, reflecting the relative values between them.

International Fisher Effect

A theory stating that the difference in nominal interest rates between two countries is equal to the expected change in exchange rates.

Expected Percentage Change

An estimation of the degree to which a specific variable such as price, cost, or investment value is anticipated to vary over a certain period.

Interest Rates

The percentage of a loan that is applied as interest for the borrower, usually shown as an annual percentage of the remaining loan amount.