# [Solved] A Discount Bond Selling for $15,000 with a Face Value

## A discount bond selling for $15,000 with a face value of $20,000 in one year has a yield to maturity of

A)3 percent.

B)20 percent.

C)25 percent.

D)33.3 percent.

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- Q51: If a perpetuity has a price of $500 and an annual interest payment of $25,the interest rate is A)2.5 percent. B)5 percent. C)7.5 percent. D)10 percent.
- Q52: The yield to maturity for a perpetuity is a useful approximation for the yield to maturity on long-term coupon bonds. It is called the ________ when approximating the yield for a coupon bond. A)current yield B)discount yield C)future yield D)star yield
- Q53: The yield to maturity for a one-year discount bond equals the increase in price over the year,divided by the A)initial price. B)face value. C)interest rate. D)coupon rate.
- Q54: If a $10,000 face-value discount bond maturing in one year is selling for $5,000,then its yield to maturity is A)5 percent. B)10 percent. C)50 percent. D)100 percent.
- Q55: If a $5,000 face-value discount bond maturing in one year is selling for $5,000,then its yield to maturity is A)0 percent. B)5 percent. C)10 percent. D)20 percent.
- Q57: The yield to maturity for a discount bond is ________ related to the current bond price. A)negatively B)positively C)not D)directly
- Q58: A discount bond is also called a ________ because the owner does not receive periodic payments. A)zero-coupon bond B)municipal bond C)corporate bond D)consol
- Q59: Another name for a consol is a ________ because it is a bond with no maturity date. The owner receives fixed coupon payments forever. A)perpetuity B)discount bond C)municipality D)high-yield bond
- Q60: Negative yields to maturity imply that bond purchasers are better off to hold cash. Acceptance of slightly negative yields by purchasers in recent times suggest that the A)convenience of storing large sums is also important to decisions. B)inflation rate is positive. C)governments have issued too many bonds. D)decision makers are only concerned with yields.
- Q61: If the interest rate is 5%,what is the present value of a security that pays you $1,050 next year and $1,102.50 two years from now? If this security sold for $2,200,is the yield to maturity greater or less than 5%? Why?

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