What Is the Yield to Maturity of A(n) Eight-Year, $5000

question 55

Multiple Choice

What is the yield to maturity of a(n) eight-year, $5000 bond with a 4.4% coupon rate and semiannual coupons if this bond is currently trading for a price of $4723.70?

• A) 6.31%
• B) 5.26%
• C) 7.36%
• D) 2.63%

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Definitions:

Degrees of Freedom

The number of independent values or quantities that can vary in the calculation of a statistic.

Numerator

The top number of a fraction, showing the number of parts out of the denominator considered.

Chi-square Distribution

A probability distribution that is used to describe the distribution of a sum of the squares of k independent standard normal random variables, often used in hypothesis testing.

Standard Deviation

A measure of the amount of variation or dispersion in a set of values, indicating how much the values differ from the mean.