Canadian Securities Course (CSC) Practice Exam · Question
An investor purchases a bond with a coupon rate of 5% paid annually for $950. The bond has a face value of $1,000 and matures in 3 years. What is the approximate yield to maturity (YTM) for this bond?
Since the bond is purchased at a discount ($950 for a $1,000 face value), its yield to maturity must be greater than its coupon rate (5%). Using trial and error
Start free practice for Canadian Securities Course (CSC) Practice Exam
335 questions · no signup required · 40 free questions per day
Question: An investor purchases a bond with a coupon rate of 5% paid annually for $950. The bond has a face value of $1,000 and matures in 3 years. What is the approximate yield to maturity (YTM) for this bond?
Answer options:
- 6.50% ✅ 6.84%
- 5.00%
- 5.45%
Correct answer: 6.84%
Explanation: Since the bond is purchased at a discount ($950 for a $1,000 face value), its yield to maturity must be greater than its coupon rate (5%). Using trial and error or a financial calculator (PV=-950, FV=1000, PMT=50, N=3), the approximate YTM is 6.84%.
Start free practice for Canadian Securities Course (CSC) Practice Exam
335 questions · no signup required · 40 free questions per day
More about Canadian Securities Course (CSC) Practice Exam
More for Canadian Securities Course (CSC) Practice Exam candidates
Ready to practice?
Free, no signup required. Build a wrong-question list as you go.
Start Free Canadian Securities Course (CSC) Practice Exam Practice →Related courses
Other Canadian certifications candidates often prepare for alongside this one.