Suppose the U

question 120

Multiple Choice

Suppose the U.S.Treasury offers to sell you a bond for $687.25.No payments will be made until the bond matures 5 years from now,at which time it will be redeemed for $1,000.What interest rate would you earn if you bought this bond at the offer price?

• A) 6.00%
• B) 8.96%
• C) 7.24%
• D) 6.39%
• E) 7.79%

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Definitions:

Payable

Refers to an amount of money that is owed by a person or company to a creditor, typically categorized in financial statements as current liabilities.

Possesses

The act of having physical control or ownership of something, indicating a legal relationship between a person and the object being possessed.

Negotiability

The characteristic of a financial instrument that allows it to be transferred or assigned from one party to another, ensuring the receiving party obtains a good title.

Negotiable Instrument

A written order or unconditional promise to pay a fixed sum of money that is transferable from one party to another.