If the Interest Rate of a One-Year Bond Is 15

question 64

Multiple Choice

If the interest rate of a one-year bond is 15 percent and its dollar price is $3,250,the face value of the bond is

• A) $3,737.50.
• B) $2,826.09.
• C) $373.75.
• D) $282.61.
• E) $3,350.00.

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Definitions:

Noncumulative Preferred Stockholders

Preferred stockholders whose dividends do not accumulate if not declared in a given period, missing dividends are not required to be paid in the future.

Current-Year Dividends

Current-Year Dividends refer to the distribution of a portion of a company's earnings to its shareholders, declared and paid within the current fiscal year.

Cumulative Preferred Stockholder

A cumulative preferred stockholder is an investor who owns preferred shares that accumulate unpaid dividends, ensuring they are paid out before any dividends on common stock.

Dividends in Arrears

Dividends on preferred stock that have been declared but not yet paid to shareholders.