CIMA Exam CIMAPRA19-F02-1 Topic 1 Question 25 Discussion

Actual exam question for CIMA's CIMAPRA19-F02-1 exam

Question #: 25
Topic #: 1

ST has in issue unquoted 7% debentures which were issued at par and are redeemable in 1 year'stime. These debentures cannot be traded. The yield to maturity on these debentures has been calculated at 5%.

Which of the following would explain why the yield to maturity is lower than the coupon?

AST will benefit from the tax relief on the interest payment.

BThe debentures will be redeemed at a discount to their par value.

CThe debentures will be redeemed at their par value.

DThe market value of the debentures must be higher than their par value.

Show Suggested Answer

Suggested Answer: B

by Lorrie at May 03, 2022, 04:38 PM

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