Say You Purchased a 5% Treasury Bond at Par and Sold

question 118

Multiple Choice

Say you purchased a 5% Treasury bond at par and sold it exactly two years later when yields were 4% per annum.If coupons were reinvested at 5% per annum, your holding period yield would be:

• A)less than or equal to 4% p.a.
• B)between 4% and 5% p.a.
• C)exactly 5% p.a.
• D)more than 5% p.a.
• E)Cannot be calculated with the information provided.

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Definitions:

Ratio-Level Measurement

A quantitative measurement that includes a true zero point, allowing for meaningful comparisons of magnitude and calculations of ratios.

Zero

A numerical value representing the absence of any quantity or magnitude.

Expert Validity

Validity as judged by relevant experts.

Face Validity

A question or measure that appears to capture the concept it is intended to capture. See also expert validity and panel validity.