Semiannual Payment Bonds with the Same Risk (Aaa) and Maturity

question 22

Multiple Choice

Semiannual payment bonds with the same risk (Aaa) and maturity (20 years) as your company's bonds have a nominal (not EAR) yield of 9 percent. Your company's treasurer is thinking of issuing at par some $1,000 par value, 20-year, quarterly payment bonds. She has asked you to determine what quarterly interest payment, in dollars, the company would have to set in order to provide the same effective annual rate (EAR) as those on the 20-year, semiannual payment bonds. What would the quarterly interest payment be, in dollars?

• A) $45.00
• B) $25.00
• C) $22.25
• D) $27.50
• E) $23.00

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Definitions:

Conflict

A situation or process in which individuals or groups experience a clash of interests, values, actions, views, or directions.

Relationship Conflict

This form of conflict arises from interpersonal incompatibilities or disputes among team members, including differences in personal values, preferences, or personalities.

Constructive Conflict

A type of conflict where the differing parties engage in positive communication and problem-solving, leading to beneficial outcomes such as innovation or improved relationships.

Individuals

Single human beings, as opposed to groups, that are units of analysis in socio-economic and organizational studies.