Martha B's Has Total Assets of $1,750

question 204

Multiple Choice

Martha B's has total assets of $1,750. These assets are expected to increase in value to either $1,800 or $2,400 by next year. The company has a pure discount bond outstanding with a face value of $2,000. This bond matures in one year. Currently, Treasury bills are yielding 6 percent. What is the value of the equity in this firm?

• A) $16.98
• B) $34.59
• C) $36.67
• D) $37.08
• E) $51.89

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Definitions:

Governing Body

is the organization or group of individuals who have the authority to make decisions, set policies, and oversee a community, organization, or governmental entity.

Delegate Council

A body that consists of representatives appointed or elected to act or speak for others.

Cabinet

A group of advisors or ministers chosen by the head of a country to head executive departments and assist in governance.

Mutual Aid

A voluntary reciprocal exchange of resources and services for mutual benefit among a group of people.