Asked by Giovanni Magana on May 05, 2024
Verified
The National Post lists a bond with the following information: The bond has a closing price of 96.96, a coupon of 6.500, maturity date of May 09/10 and Yld% of 6.51%. Which one of the following statements about this bond is correct?
A) The closing price of the bond on the prior trading day was $1,096.96.
B) The bond matures in 2009.
C) The yield to maturity is 6.51%.
D) The bond is a premium bond.
E) Each coupon payment is $70.00.
Yield To Maturity
The overall gain predicted for a bond if it is held all the way to its due date for maturity.
Coupon
The interest rate stated on a bond when issued, which represents the actual amount of interest paid to bondholders.
Maturity Date
The specified date on which the principal amount of a loan, bond, or other financial instrument is to be repaid.
- Compute and comprehend the importance of yield to maturity, current yield, and assess the influence of fluctuations in interest rates on the valuation of bonds.
- Gain an understanding of the configuration and constituents of a bond, including how the face value, market price, clean price, and dirty price differ.
Verified Answer
FA
Fakhrul AimanMay 09, 2024
Final Answer :
C
Explanation :
The yield to maturity (Yld%) is given as 6.51%, which directly matches the information provided in the bond listing.
Learning Objectives
- Compute and comprehend the importance of yield to maturity, current yield, and assess the influence of fluctuations in interest rates on the valuation of bonds.
- Gain an understanding of the configuration and constituents of a bond, including how the face value, market price, clean price, and dirty price differ.