If the Yield to Maturity of All of the Following

question 50

Multiple Choice

If the yield to maturity of all of the following bonds is 6%,which trades at the greatest discount per $100 face value?

• A)a bond with a $10,000 face value,four years to maturity and 6.2% semi-annual coupon payments
• B)a bond with a $500 face value,ten years to maturity and 5.2% annual coupon payments
• C)a bond with a $5000 face value,seven years to maturity and 5.5% annual coupon payments
• D)a bond with a $1000 face value,five years to maturity and 6.3% annual coupon payments
• E)a bond with a $100 face value,3 years to maturity and 6.0% annual coupon payments

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Definitions:

Price Elasticity

A measure of how much the quantity demanded of a good changes in response to a change in its price.

Inelastic Supply

A situation in which the supply of a good or service is not significantly affected by changes in price, characterized by a relatively steep supply curve.

Underage Drinking

The consumption of alcoholic beverages by individuals below the legal drinking age in their respective jurisdictions.

Tax

A compulsory financial charge or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund government spending and various public expenditures.