U)STreasury Bond Will Pay a Lump Sum of $1,000 Exactly

question 120

Multiple Choice

U) S.Treasury bond will pay a lump sum of $1,000 exactly 3 years from today.The nominal interest rate is 6%, semiannual compounding.Which of the following statements is CORRECT?

• A)The periodic interest rate is greater than 3%.
• B)The periodic rate is less than 3%.
• C)The present value would be greater if the lump sum were discounted back for more periods.
• D)The present value of the $1,000 would be smaller if interest were compounded monthly rather than semiannually.
• E)The PV of the $1,000 lump sum has a higher present value than the PV of a 3-year, $333.33 ordinary annuity.

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Definitions:

56 Ω

A specific value of electrical resistance indicating that an object opposes the flow of electric current with a force of 56 ohms.

Current Flow

The movement of electric charge carriers, like electrons, through a conductor, measured in amperes (A).

Current Flow

The directed movement of electric charge through a conductor, often described in terms of direction from positive to negative points.

Parallel

An electrical circuit configuration where components are connected across the same two points, providing multiple paths for the current.