When Determining How to Compute the Present Value of a Bond

question 151

Multiple Choice

When determining how to compute the present value of a bond, the buyer computes the ________.

• A) present value of the par value discounted at the market rate and the present value of the interest discounted at the stated rate
• B) future value of the par value and interest discounted at the stated interest rate
• C) present value of the interest discounted at the market rate and the present value of the par value discounted at the stated rate
• D) present value of the par value and the present value of the interest discounted at the market interest rate

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Definitions:

Federal Level

pertains to governmental authority and activities that are conducted at the national level, as opposed to state or local levels.

Interpretive Rules

Regulations issued by administrative agencies to clarify the meaning of existing laws or procedures.

Compliance

The act of adhering to laws, regulations, guidelines, and standards set by governmental bodies or industry organizations.

Administrative Law Judge

An official who presides over government agency hearings and makes decisions on disputes involving administrative law.