If the Final Expressions in a Present Value Equation Used

question 181

Multiple Choice

If the final expressions in a present value equation used to calculate the price of a bond you are considering buying are "[$75 / (1 + .04) ⁶] + [$2,500 / (1 + .04) ⁶]," which of the following is correct?

• A)The face value is $2,500,the coupon is $75,and the coupon will mature in 4 years.
• B)The face value is $75,the interest rate you need is 1.04 percent,and the coupon will mature in 6 years.
• C)The face value is $2,500,the interest rate you need is 6 percent,and the coupon will mature in 4 years.
• D)The coupon is $75,the interest rate you need is 4 percent,and the coupon will mature in 6 years.

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