A Company Releases a Five-Year Bond with a Face Value

question 46

Multiple Choice

A company releases a five-year bond with a face value of $1000 and coupons paid semi-annually.If market interest rates imply a YTM of 6%,which of the following coupon rates will cause the bond to be issued at a premium?

• A)3%
• B)4%
• C)6%
• D)8%
• E)5%

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Definitions:

Agricultural Surpluses

The excess production of agricultural products beyond what is needed for consumption, often leading to lower prices.

Federal Government

The national government of a federal country, which holds the highest level of authority, often over states or provinces.

Supply And Demand

Fundamental economic principle that describes how the availability of goods (supply) and the desire for them (demand) determine their price.

Acreage Allotment Program

A governmental policy aimed at controlling crop production by limiting the acres that can be cultivated, historically used in the US to support agricultural prices.