If a Corporate Bond with Face Value of $5,000 Has

question 184

Multiple Choice

If a corporate bond with face value of $5,000 has an interest rate of 4 percent paid once a year for a term of 30 years, what is the size of the coupon payment?

• A)$4
• B)$200
• C)$1,250
• D)$5,000

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Definitions:

Market Value

The existing cost at which a service or asset is available for purchase or sale in the market.

Sales Tax

A tax imposed by government on sales of goods and services, typically computed as a percentage of the sale price.

Delivery Charge

A fee charged by a seller to cover the cost of delivering goods to a buyer's location.

Valuation Rate

The interest rate or discount rate used in determining the present value of future cash flows or in appraising the value of an asset.