A $100,000 5-Year 5% Bond Is Issued on January 1

question 68

Multiple Choice

A $100,000 5-year 5% bond is issued on January 1, 2020. The bond pays interest annually. The market rate is 7%. What is the selling premium or discount on the bonds, rounded to nearest dollar?

• A)$8,659 premium
• B)$8,200 premium
• C)$8,659 discount
• D)$8,200 discount

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Definitions:

Fundamentalism

A strict adherence to specific theological doctrines typically in a reaction against modernist theories, often characterized by a literal interpretation of religious texts.

Pluralism

A political philosophy or system that recognizes and affirms diversity within a political body, allowing for the peaceful coexistence of different interests, convictions, and lifestyles.

Calvin Coolidge

The 30th President of the United States, serving from 1923 to 1929, known for his conservative policies and small government philosophy.

Reconstruction Finance Corporation

A federal agency established in 1932 under President Hoover to provide financial support to state and local governments and make loans to banks, railroads, and other businesses.