A Bond Issued 10 Years Ago Had a Face Value

question 185

Multiple Choice

A bond issued 10 years ago had a face value of $2,000, a coupon rate of 5%, and a yield of 6% when sold last month in the secondary bond market. At what price did the bond sell in the secondary market?

• A) $1,666.67
• B) $2,120.00
• C) $1,880.00
• D) $2,220.00

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Definitions:

Long-run Unemployment

A situation where the unemployment rate persists at a high level for a long period of time, often due to structural changes in the economy.

Bureau of Labor Statistics

A U.S. government agency responsible for collecting and reporting data on employment, labor market activity, working conditions, and price changes.

Average Workweek

The average number of hours worked per week by employees in a specific sector or economy.

Natural Rate

The long-term rate of unemployment around which the job market is in balance, where all those willing to work at prevailing wage rates can find employment.