You Are Offered a $1,000 Par Value Bond Which Has

question 33

Multiple Choice

You are offered a $1,000 par value bond which has a stepped-up coupon interest rate.The annual coupon rate is 10 percent coupon, payable semiannually ($50 each 6 months) for the first 15 years, and then the annual coupon increa to 13 percent, also payable semiannually, for the next 15 years.The first interest payment will be made 6 months fro today, and the $1,000 principal amount will be returned at the end of Year 30.You currently have savings in an account which is earning a 9 percent simple rate, but with quarterly compounding; this is your opportunity cost for purposes of analyzing the bond.What is the value of the bond to you today?

• A)$1,614.53
• B)$1,419.18
• C)$1,306.21
• D)$1,250.25
• E)$1,155.98

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Definitions:

Authoritarian Parents

Parents who adopt a strict parenting style characterized by high demands and low responsiveness, often expecting obedience without question.

Language Development

The method through which young children acquire and learn to use language in their early years.

Social Responsibility

The concept that individuals and organizations have a duty to act in the best interests of their environments and society as a whole.

Independent

Free from outside control; not depending on another's authority.