A Coupon Bond That Pays Interest Annually Has a Par

question 91

Multiple Choice

A coupon bond that pays interest annually has a par value of $1,000, matures in seven years, and has a yield to maturity of 9.3%.The intrinsic value of the bond today will be ______ if the coupon rate is 8.5%.

• A)$712.99
• B)$960.14
• C)$1,123.01
• D)$886.28

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Definitions:

Inferior

A term used to describe a position below or lower than another part of the body; opposite of superior.

Sternum

The long, flat bone located in the center of the chest which connects to the ribs via cartilage to form the front part of the rib cage, providing protection to the chest organs.

Pelvis

The lower part of the torso, located between the abdomen and the thighs, consisting of several bones including the hip bones, sacrum, and coccyx.

Serous Membrane

A thin layer of tissue that covers internal body cavities and secretes a lubricating fluid to reduce friction from muscle movement.