A Person Buys a Bond with a Face Value of $10,000

question 33

Multiple Choice

A person buys a bond with a face value of $10,000 for $9,780. Each year until the maturity date the bond buyer receives $650 from the issuer of the bond. The yield on the bond is

• A)6.6 percent.
• B)6.5 percent.
• C)10.0 percent.
• D)6.75 percent.
• E)There is not enough information to answer the question.

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Definitions:

Utility Function

A tool used in economics to represent a consumer's preference structure across different bundles of goods.

Budget Constraint

The limits imposed on household choices by income, wealth, and product prices.

Apples

A widely consumed fruit, known for its crispiness and variety of flavors, often used as a symbol for health and education.

Utility Function

A mathematical representation of how different combinations of goods or services generate levels of happiness or satisfaction for a consumer.