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:

Security Agreement

An agreement that creates or provides for a security interest between the debtor and a secured party.

Nonnegotiable

An item or condition that cannot be altered or discussed for change.

Three-Party Instrument

A financial document or contract involving three parties, where one party is typically promised payment by another, with the third acting as a guarantor or intermediary.

Payment Fund

A reserve of money that is set aside to cover future payments, debts, or expenses.