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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Definitions:

Family Home

A residence where a family lives, often considered in legal contexts regarding its protection and rights against creditors or in cases of divorce.

Undue Influence

A legal term referring to a situation where a person takes advantage of their power over another person, leading to unfair agreements.

Unsound Mind

A state or condition in which an individual lacks the legal or mental capacity to manage personal affairs or understand the consequences of actions.

Intestate Succession

The process by which property passes to others when people die without a will.