Consider a One-Year Maturity, $100,000 Face Value Bond That Pays

question 110

Multiple Choice

Consider a one-year maturity, $100,000 face value bond that pays a 6 percent fixed coupon annually.What is the price of the bond if market interest rates are 7 percent?

• A)$99,050.15.
• B)$99,457.94.
• C)$99,249.62.
• D)$100,000.00.
• E)$99,065.42.

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Definitions:

Industry's Price

The general price level at which goods and services are bought and sold within a specific industry.

Output

The total amount of goods and services produced by a company, industry, or economy.

Marginal Revenue Curve

A graphical representation that shows how marginal revenue varies with changes in the quantity of output sold.

Deadweight Loss

A loss of economic efficiency that can occur when equilibrium for a good or a service is not achieved or is not achievable.