If the Discount Rate on the Bond Is 8%, the Expected

question 4

Multiple Choice

If the discount rate on the bond is 8%, the expected payment in year-1 is $952.50; calculate the price of the bond:

• A) $1050
• B) $985
• C) $907.14
• D) none of the given answers

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Definitions:

Public Corporation

A company whose shares are traded freely on a stock exchange, owned by public investors, and subject to specific disclosure and regulatory requirements.

Transfer Agents

Organizations or individuals responsible for maintaining records of securities owners and managing the transfer of stock or bonds between parties.

Retained Earnings

Definition: The portion of a business's profits not distributed as dividends to shareholders but instead retained for reinvestment or to pay off debt.

Cash Dividend

A payment of earnings declared by a company's board of directors, distributed among shareholders in the form of cash.