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

question 48

Multiple Choice

A company releases a five-year bond with a face value of $1 000 and coupons paid semi-annually. If market interest rates imply a YTM of 6%, what should be the coupon rate offered if the bond is to trade at par?

• A)4%
• B)8%
• C)6%
• D)3%

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Definitions:

Biosphere

All regions of Earth where organisms live.

Population

A community of identical species inhabitants coexisting and mating in a particular region.

Decomposers

Organisms, primarily fungi and bacteria, that break down dead organic material, recycling nutrients back into the ecosystem.

Consumers

Organisms in an ecosystem that obtain energy by feeding on other organisms or organic matter, not capable of producing their own food.