If the Yield to Maturity of All of the Following

question 28

Multiple Choice

If the yield to maturity of all of the following bonds is 6%, which will trade at the greatest premium per $100 face value?

• A) a bond with a $10,000 face value, four years to maturity and 6.2% semiannual coupon payments
• B) a bond with a $500 face value, seven years to maturity and 5.2% annual coupon payments
• C) a bond with a $5,000 face value, seven years to maturity and 5.5% annual coupon payments
• D) a bond with a $1,000 face value, five years to maturity and 6.3% annual coupon payments

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Definitions:

Minute

A unit of time equal to 60 seconds or 1/60th of an hour, commonly used to measure the duration of time.

Discrete Variables

Variables in statistical analysis that assume distinct or separate values, often counted in whole numbers.

State Variables

Variables that represent the configurations or states of a system at a certain time, in disciplines such as physics, engineering, and economics.

Average Number

The central value of a set of numbers, calculated by dividing the sum of all values by the count of the numbers.