Consider a Bond with a Current Yield of 8 Percent

question 84

Multiple Choice

Consider a bond with a current yield of 8 percent and a price of $1,250. What is this bond's coupon?

• A) 8.0 percent
• B) 10.0 percent
• C) 11.0 percent
• D) 8.5 percent
• E) 9.6 percent

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Definitions:

Large-company Stocks

Shares that represent ownership in corporations with large market capitalizations.

Risk Premium

The extra return expected by investors for holding a risky asset compared to a risk-free asset, compensating for the additional risk.

Total Return

The complete return on an investment over a specified period, including both capital gains and income received.

Dividend

A portion of a company's earnings that is paid to shareholders or owners as a distribution of profits.