Series 7 - General Securities Representative Exam
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Your new client just transferred a portfolio to you that includes a BCD corporate debenture. It has an 8 percent coupon and a basis of 8 percent. If the bond is called in 5 years with a yield to call of 8.5 percent, how much did your client pay for the bond?
Over $1,000
A
$1,000
B
Below $1,000
C
not enough data to calculate
D
Explanations
The coupon rate is 8 % and the basis (YTM) is also 8 %. Therefore, the bond was purchased at par value of $1,000. The call premium and yield to call are non essential information in this question