Which Is True

question 7

Multiple Choice

Which is true?

• A)The present value of a 20-year annuity of $1,900 at 8% is $16,854
• B)A $100,000 bond with a 5% coupon will sell at a premium when the market rate of interest is 6%
• C)The issue price of a $150,000 zero coupon bond that matures in 6 years when the market rate of interest is 6% is $105,744
• D)The present value of a perpetual income stream of $4,000 when the market rate of interest is 8% is $50,000
• E)None of the above

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Definitions:

Cognitive Dissonance

Cognitive dissonance is a psychological concept describing the discomfort experienced when holding contradictory beliefs, values, or attitudes, typically leading to a change in one of them to reduce the dissonance.

Attitudes

are psychological tendencies expressed by evaluating a particular entity with some degree of favor or disfavor.

Behavior

The actions or reactions of an object or organism, usually in relation to the environment, which can be observed and measured.

Likert Scale

A psychometric scale commonly involved in research that employs questionnaires, used to gauge attitudes, values, or responses involving degrees of agreement or disagreement.