ST has in issue unquoted 7% debentures which were issued at par and are redeemable...

CIMA F2 Question Answer

ST has in issue unquoted 7% debentures which were issued at par and are redeemable in 1 year's time. 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?

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

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

The debentures will be redeemed at their par value.

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

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CIMA F2 Summary

Vendor: CIMA
Product: F2
Update on: Jul 29, 2025
Questions: 268

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ST has in issue unquoted 7% debentures which were issued at par and are redeemable...

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