Assume That You Are Considering the Purchase of a $1,000

question 27

Multiple Choice

Assume that you are considering the purchase of a $1,000 par value bond that pays interest of $70 each six months and has 10 years to go before it matures.If you buy this bond,you expect to hold it for 5 years and then to sell it in the market.You (and other investors) currently require a simple annual rate of 16 percent,but you expect the market to require a rate of only 12 percent when you sell the bond due to a general decline in interest rates.How much should you be willing to pay for this bond?

• A) $842.00
• B) $1,115.81
• C) $1,359.26
• D) $966.99
• E) $731.85

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Definitions:

Filtration Membrane

A barrier that separates particles based on size, allowing some to pass while blocking others, specifically in the context of biological systems like the kidneys.

Podocytes

Specialized cells in the kidneys that wrap around capillaries of the glomerulus, playing a key role in the filtration of blood to form urine.

Urinary Bladder

An organ that stores urine excreted by the kidneys before disposal via urination.

Urethra

The duct through which urine is discharged from the bladder to the exterior of the body in most mammals.