A $1,000 Par, 8% Treasury Bond Maturing in Three Years

question 17

Multiple Choice

A $1,000 par, 8% Treasury bond maturing in three years is priced to yield 7%. Its market price (assuming semiannual compounding) is

• A) $974.21
• B) $813.50
• C) $927.50
• D) $1,026.64

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Definitions:

Bedrock

The solid rock underlying loose deposits such as soil or alluvium, often exposed at the earth's surface or underlying younger sedimentary layers.

Mediterranean Sea

A sea connected to the Atlantic Ocean, surrounded by the Mediterranean region and almost completely enclosed by land.

Volcanic Eruption

A volcanic eruption is a geologic event during which magma (lava), gases, and ash are expelled from a volcano's vent to the surface.

Meteorite

A fragment of a meteoroid that has fallen to a planetary surface.