Assume That You Are Considering the Purchase of a $1,000

question 80

Multiple Choice

Assume that you are considering the purchase of a $1,000 par value bond that pays interest of $70 each six months and has 10 years to go before it matures. If you buy this bond, you expect to hold it for 5 years and then to sell it in the market. You (and other investors) currently require a nominal annual rate of 16 percent, but you expect the market to require a nominal rate of only 12 percent when you sell the bond due to a general decline in interest rates. How much should you be willing to pay for this bond?

• A) $ 842.00
• B) $1,115.81
• C) $1,359.26
• D) $ 966.99
• E) $ 731.85

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Definitions:

Antisocial Behavior

Refers to actions that harm or lack consideration for the well-being of others, often violating social norms.

Disorganized-disoriented Attachment

A type of attachment seen in children who display inconsistent and erratic behaviors towards caregivers, often as a result of trauma.

Insecure-resistant Attachment

A type of attachment characterized by children who are anxious and uncertain about exploration and exhibit distress when separated from their caregivers but are ambivalent upon their return.

Disorganized-disoriented Attachment

A type of attachment characterized by inconsistent and erratic behaviors towards caregivers, often seen in children experiencing neglect or abuse.