Determine How Much You Would Be Willing to Pay for a Bond

question 78

Multiple Choice

Determine how much you would be willing to pay for a bond that pays $60 annual interest indefinitely and never matures (i.e., a perpetuity) , assuming you require an 8 percent rate of return on this investment.

• A) $480
• B) $743
• C) $1,000
• D) $750

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Definitions:

Football Players

Athletes who participate in football, a team sport involving the passing and kicking of a ball to score points.

Standard Deviation

A standard for gauging the extent of variability or distribution across a series of values.

Normally Distributed

Describes a bell-shaped distribution that is symmetric about the mean, where data near the mean are more frequent in occurrence than data far from the mean.

Football Players

Individuals who participate in football, a team sport involving the kicking of a ball to score goals or points.