Which of the Following Bonds Is Trading at a Premium

question 83

Multiple Choice

Which of the following bonds is trading at a premium?

• A) a five-year bond with a $2,000 face value whose yield to maturity is 7.0% and coupon rate is 7.2% APR paid semiannually
• B) a ten-year bond with a $4,000 face value whose yield to maturity is 6.0% and coupon rate is 5.9% APR paid semiannually
• C) a 15-year bond with a $10,000 face value whose yield to maturity is 8.0% and coupon rate is 7.8% APR paid semiannually
• D) a two-year bond with a $50,000 face value whose yield to maturity is 5.2% and coupon rate is 5.2% APR paid monthly

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Definitions:

Commonwealth

A political community consisting of member states and territories united by common interests or values, often sharing a historical link to the British Empire.

Business Practices

Set of methods, traditions, and conventions that guide how a company operates in the market.

Wholly Owned Subsidiaries

Companies that are completely owned by another company, which holds 100% of the subsidiary's shares.

International Business

The exchange of goods, services, technology, and capital across national borders, involving transactions that plan for global outreach and operational strategies.