You Have Just Been Offered a $1,000 Par Value Bond

question 35

Multiple Choice

You have just been offered a $1,000 par value bond for $847.88.The coupon rate is 8 percent,payable annually,and interest rates on new issues of the same degree of risk are 10 percent.You want to know how many more interest payments you will receive,but the party selling the bond cannot remember.Can you determine how many interest payments remain?

• A) 14
• B) 15
• C) 12
• D) 20
• E) 10

---

Definitions:

Reporting Agencies

Organizations that collect and disseminate information on individuals' or companies' financial and credit history.

Specific Calculations

Defined processes or formulas used to solve particular problems or to determine exact values within a given context.

Leverage Ratio

A financial ratio that measures the degree of an entity’s reliance on borrowed funds compared to its equity.

Financial Statements

Documents that provide an overview of a business or individual's financial condition, including balance sheets, income statements, and cash flow statements.