A Corporation Issues a Bond That Generates the Above Cash

question 29

Multiple Choice

$$\begin{array} { l llllll } 0 & 1 & 2 & 3 && 59 & 60 \\+ \cdots &+ \ldots &+ \ldots &+ \cdots & \ldots & \ldots + \ldots &+\\&\$62.50&\$62.50&\$62.50&&\$62.50&\$62.50+\$5,000\end{array}$$ A corporation issues a bond that generates the above cash flows. If the periods shown are 3 months, which of the following best describes that bond?

• A) a 30-year bond with a notional value of $5000 and a coupon rate of 3.75% paid semiannually
• B) a 60- year bond with a notional value of $5000 and a coupon rate of 5% paid quarterly
• C) a 15-year bond with a notional value of $5000 and a coupon rate of 5% paid quarterly
• D) a 15-year bond with a notional value of $5000 and a coupon rate of 1.25% paid annually

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