Which One of the Following Is the Correct Bond Pricing

question 141

Multiple Choice

Which one of the following is the correct bond pricing equation?

• A) Bond value = {C}{[1 - 1/(1 + r)]/r^t} + F - 1/(1 + r)^t]/r
• B) Bond value = {C}{[1 + 1/(1 + r)^t]/r} + F/(1 + r)^t
• C) Bond value = {C}{[1 - 1/(1 + r)^t]/r} + F/(1 + r)^t
• D) Bond value = {C}{[1 + 1/(1 + r)]/r^t} + F/(1 + r)
• E) Bond value = {C}{[1 + 1/(1 + r)^t]/r} + [F - (1 + r^t)/r]

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Definitions:

Tips

A small amount of money given to someone as a way of thanking them for their service or advice, or suggestions intended to provide guidance or advice.

Valid Argument

An argument such that its premises logically imply or entail its conclusion which makes it impossible for all of its premises to be true and its conclusion to be false.

Denying the Consequent

A valid form of argument in which, from the premises that if P then Q, and not Q, one concludes not P.

Denying the Consequent

A form of logical argument where, if the premise states that if P then Q, and Q is found to be false, then P is also concluded to be false.