The Present Value of a Discount Bond with One Year

question 36

Multiple Choice

The present value of a discount bond with one year to maturity, face value $1,000 and yield to maturity 5% is

• A) $952.38.
• B) $1,000.00.
• C) $1,005.00.
• D) $1,050.00.

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Definitions:

Retained Earnings

The amount of net profit remaining for the company after distributing dividends to its stockholders.

Note Payable

A written promise to pay a specified amount of money, along with interest, by a certain date.

Interest Expense

The cost incurred by an entity for borrowed funds, recognized in the income statement.

Income Statement

A financial report that shows the revenue, expenses, and profit or loss of a business over a specific period of time.