Margaret Wants to Compute the Present Value of a Six

question 118

Multiple Choice

Margaret wants to compute the present value of a six year semi-annual 8% coupon bond that has a 9% yield to maturity. Which one of the following is correct?

• A) The number of interest payments is twelve.
• B) The present value is assumed to be $1,000.
• C) The amount of each interest payment is $80.
• D) The bond is selling at a premium.
• E) The current price of the bond will be greater than the par value.

Recognize the significance of sustainable resource management practices in both forestry and fisheries.

Grasp the importance of property rights in the open ocean for fishery management.

Comprehend the historical context of natural resource consumption and its impact on living standards.

Understand how economic indicators like GDP correlate with environmental quality.

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Definitions:

Treasury Bonds

Long-term government debt securities issued by the U.S. Treasury with a maturity of more than ten years that pay periodic interest until maturity when the face value is paid back.

Ask Price

The price at which a dealer will sell a security.

Wall Street Journal

An international daily newspaper focused on business and economic news, published in New York.

Treasury Note

Medium-term securities issued by the U.S. Treasury that mature in two to ten years and pay interest every six months.