The Price of a Bond with No Expiration Date Is

question 123

Multiple Choice

The price of a bond with no expiration date is $10,000 and it has a fixed annual interest payment of $2,000.If the bond is sold to a new owner for a price of $12,500, then the effective interest rate yield on the bond is now:

• A)22 percent.
• B)18 percent.
• C)17 percent.
• D)16 percent.

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Definitions:

Interim Financial Statement

Interim financial statements are financial reports covering a period of less than a full fiscal year, providing a more immediate view of financial health.

Capital

Refers to financial assets or the financial value of assets, such as cash and goods, used by a business to fund its operations and growth.

Fees Earned

Income received from providing services, typically recognized in the accounting period when the services are rendered.

Wage Expense

The total cost incurred by a company for the salaries and wages of its employees.