Decide Whether the Statement Makes Sense

question 198

Essay

Decide whether the statement makes sense. Explain your reasoning.
-My annual income after tax is only $25,000. I need to cut back on my nonessential
spending. Something has to go - either the mango smoothies, the movies, or the vacation. I
figure it's the vacation that is making the biggest dent in my budget. I take a vacation once
a year which costs about $1200. I go to the movies once a week and spend a total of $18
and I have a mango smoothie every day at my favorite cafe. It costs $4.50 plus tax.

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Definitions:

Coupons

Fixed interest payments made by a bond issuer to its bondholders at specified intervals.

Zero-Coupon Bond

A bond that is issued at a discount and does not pay annual interest but is redeemed at its face value at maturity.

Deep Discount

The sale of an asset or product at a price significantly below its usual or intrinsic value.

Coupon Payments

Periodic interest payments made to bondholders, typically on a semi-annual basis, based on the coupon rate of the bond.