Micro Company Wishes to Issue $400,000 of 5-Year, 6% Bonds

question 108

Multiple Choice

Micro Company wishes to issue $400,000 of 5-year, 6% bonds, with interest paid annually at the end of the year.The market rate of interest is currently 5%.What information is needed in order to determine the selling price?

• A)The market rate of interest, the stated rate of interest, the bond rating, and the bond life.
• B)The face amount of the bonds, the stated rate of interest, the market rate of interest, and the bond life.
• C)The life of the bonds, the market rate of interest, the bond rating, and the face amount of the bonds.
• D)The face amount of the bonds, the market rate of interest, the purpose of the issue, and the bond life.

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Definitions:

Economic Efficiency

A state where resources are allocated in a way that maximizes the production of goods and services at the lowest cost, optimizing welfare or profit.

Consumer Protection

Laws and regulations intended to safeguard buyers of goods and services from unfair, deceptive, or harmful practices by sellers.

Whistle-blower

An individual who exposes illegal, unethical, or wrong practices within an organization to the public or to authorities.

Additives

Substances added to products, such as food or fuel, to enhance their properties or preserve their quality.