A Corporate Bond with a Face Value of $1,000 Matures

question 13

Multiple Choice

A corporate bond with a face value of $1,000 matures in 4 years and has a 8% coupon paid at the end of each year.The current price of the bond is $932.What is the yield to maturity for this bond?

• A) 5.05%.
• B) 8.58%.
• C) 10.15%.
• D) 11.92%.
• E) 6.48%.

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Definitions:

Elasticity of Demand

The degree to which the quantity demanded of a good or service varies with its price. Generally, a high elasticity indicates that demand is sensitive to price changes.

Inverse Demand Curve

Another term for the inverse demand function, it graphically represents how price depends on the quantity demanded, illustrating the relationship inverse to the demand curve.

Total Revenue

The total amount of money received by a company from selling goods or services before any expenses are deducted.

Inverse Demand Function

A mathematical representation that describes the relationship between the price of a good and the quantity that consumers are willing and able to purchase, expressed as price as a function of quantity demanded.