Series 7 - General Securities Representative Exam

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Your client, Mr Jones, purchased a YLD corporate bond with a 6.5 percent coupon. The YTM is 6.5 percent. If the bond is to be called in 5 years with a YTC of 7.25 percent, how much did Mr. Jones pay for this bond?

$1,000
A
Over par value
B
Under par value
C
Not enough data
D

Explanations

The coupon and yield to maturity is identical; so we know that he paid exactly par value - $1,000. The test will include extraneous information like the 5 years and yield to call in this question

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