O'Brien Ltd

question 12

Multiple Choice

O'Brien Ltd.'s outstanding bonds have a $1,000 par value,and they mature in 25 years.Their nominal yield to maturity is 9.25%,they pay interest semiannually,and they sell at a price of $975.What is the bond's nominal coupon interest rate?

• A)7.32%
• B)7.71%
• C)8.12%
• D)8.54%
• E)8.99%

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Definitions:

Industry

A category of business activity that produces goods or provides services, categorized by their focus and processes.

Marginal Cost Curve

A graphical representation showing how the cost of producing one more unit of a good affects the overall cost of production.

Joint Monthly Profit

The combined profit earned by two or more partners or businesses in a single month.

Cartel

An organization of sellers designed to coordinate supply and price decisions so that the joint profits of the members will be maximized. A cartel will seek to create a monopoly in the market for its product.