A Company Issues a Ten-Year $1000 Bond at Par with a Coupon

question 64

Multiple Choice

A company issues a ten-year $1000 bond at par with a coupon rate of 6% paid semi-annually.The YTM at the beginning of the third year of the bond (8 years left to maturity) is 7.8%.What was the percentage change in the price of the bond over the past two years?

• A)11.81%
• B)-43.04%
• C)-10.56%
• D)75.55%
• E)6.57%

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Definitions:

Interpret

To explain the meaning of information, data, or actions to understand their significance or implications.

One-Sample Z-Test

A statistical hypothesis test used to determine whether the mean of a single sample is significantly different from a known or hypothesized population mean.

T-Test

An analysis technique designed to assess if the mean values of two separate groups differ significantly.

Sample Size

Refers to the number of observations or data points used in a study or experiment.