A Bond Has a Face Value of $1,000 and an Annual

question 207

Multiple Choice

A bond has a face value of $1,000 and an annual interest payment of $44. What is its coupon rate, and what is its yield if it is sold for $1,100 in the secondary market?

• A) 4.0% and 4.4%, respectively
• B) 4.4% and 4.0%, respectively
• C) 4.4% and 10%, respectively
• D) 44% and 4.4%, respectively

Understand the concept of educational investment and its impact on labor market outcomes.

Analyze the effects of different cost structures on individuals' decisions to invest in education.

Comprehend the signaling theory and its application in the job market.

Understand the concept of moral hazard and adverse selection in insurance markets.

---

Definitions:

Human Nature

The innate characteristics, behaviors, and qualities that define humans, including both biological and psychological aspects.

Altruistic

Showing selfless concern for the well-being of others; often characterized by behavior that benefits others at a personal cost.

Political Decisions

Choices or judgments made by individuals or groups related to the governance of a country, state, or community.

Tradeoffs

Situations where to gain some advantage, one must give up another advantage, highlighting the balance of benefits and costs in decision-making.