A Five-Year Bond with a $1 000 Face Value Has

question 67

Multiple Choice

A five-year bond with a $1 000 face value has a yield to maturity of 5.5% and its coupon rate is 6.0% paid annually. The dirty price of this bond exactly six months after its second coupon payment is closest to:

• A)$1 043.49
• B)$684.67
• C)$1 005.87
• D)$983.93

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Definitions:

February

The second month of the year, often associated with cold weather in the Northern Hemisphere and used as a time period reference in accounting.

Materials Price Variance

The difference between the actual cost of materials and the expected (or standard) cost.

March

The third month of the year in the Gregorian calendar.

Standard Amount

A predetermined benchmark for expenses, revenues, or units produced, used for budgeting and measuring performance.