A $1000 Face Value Bond Currently Has a Yield to Maturity

question 25

Multiple Choice

A $1000 face value bond currently has a yield to maturity of 6.69 per cent.The bond matures in 3 years and pays interest annually.The coupon rate is 7 per cent.What is the current price of this bond?

• A)$1005.26
• B)$948.01
• C)$1008.18
• D)$949.60
• E)$1010.13

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Definitions:

Spendthrift Trust

A legal arrangement that restricts the beneficiary's ability to access the trust capital directly, thus protecting the trust assets from creditors.

Income-Producing

Capable of generating income, typically through investment or business operations.

Real Property

Land and anything permanently affixed to it, such as buildings and structures, legally recognized as immovable property.

Permanent Improvement

An addition or change to a piece of property that increases its value and is designed to last for a long period of time, such as building an extension.