If the Yield to Maturity of All of the Following

question 93

Multiple Choice

If the yield to maturity of all of the following bonds is 6%, which trades at the greatest premium 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, 10 years to maturity and 5.2% annual coupon payments
• C)a bond with a $1 000 face value, five years to maturity and 6.3% annual coupon payments
• D)a bond with a $5 000 face value, several years to maturity and 5.5% annual coupon payments

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Definitions:

Contestable Market

A market where there are no barriers to entry or exit, allowing for potential competitors to enter the market easily, keeping prices competitive.

Market Entry

The process or strategy by which a company enters into a new market or industry, often involving overcoming barriers to entry and competition.

Market Exit

The process of a company or business stopping operations or leaving a specific market or industry.

Concentration Ratio

The share of industry output in sales or employment accounted for by the top firms.