Question
1. If the bonds of Palmer Products referenced in the previous question may be called after 6 years at a 10% call premium (i.e. $1,100),
1. If the bonds of Palmer Products referenced in the previous question may be called after 6 years at a 10% call premium (i.e. $1,100), what is the yield to call for the bonds?
a. | 10.09% | |
b. | 7.50% | |
c. | 4.53% | |
d. | 3.90% | |
e. | 2.54% |
2. The term Yield to Maturity can be defined as:
a. | The rate of return earned on a bond if it is called before its maturity date. | |
b. | The annual interest payment on a bond divided by the bonds current price | |
c. | The stated annual interest rate on a bond | |
d. | The specified number of dollars of interest paid each period | |
e. | The rate of return earned on a bond if it is held to maturity |
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