A Company Issued 10-Year,8% Bonds with a Face Value of $200,000.Interest

question 123

Multiple Choice

A company issued 10-year,8% bonds with a face value of $200,000.Interest is paid annually.The market rate on the issue date was 7.5% and the company received $206,948 in cash proceeds.Which of the following statements is true?

• A)The company must pay $184,000 at maturity plus $16,000 in interest each year for 10 years.
• B)The company must pay $206,948 at maturity plus $15,000 in interest each year for 10 years.
• C)The company must pay $200,000 at maturity plus $16,000 in interest each year for 10 years.
• D)The company must pay $200,000 at maturity plus $15,000 in interest each year for 10 years.

---

Definitions:

Nonlinear

A relationship or function that does not follow a straight line when graphed, indicating a proportional rate of change.

Spread

The extent to which a set of values, such as data points in a dataset, are spread out or dispersed from their average.

Golf Ball

A small, hard ball used in the game of golf, designed with dimples to aid its flight stability.

Residuals

In statistical models, residuals are the differences between observed and predicted values of data, used to assess the model's fit.