What Kind of Payment Does Interest Represent

question 110

Multiple Choice

What kind of payment does interest represent?

• A) a payment now for money to be transferred in the future
• B) a payment in the future for a transfer of money in the past
• C) a payment in the past for money transferred now
• D) a payment at the time of the transfer of money

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Definitions:

Purchase Price

The amount of money paid to buy a security, asset, or property.

Face Value

The nominal or dollar value printed on a security or financial instrument, such as a bond or stock.

Zero-Coupon Bond

A bond that does not pay periodic interest payments, but is instead sold at a discount from its face value and pays its full value at maturity.

Purchase Price

The amount of money paid to buy an asset.