Which of the Following Amounts Is Closest to the Value

question 55

Multiple Choice

Which of the following amounts is closest to the value of a bond that pays $55 semiannually and has an effective semiannual interest rate of 5%? The face value is $1,000 and the bond matures in 3 years. There are exactly six months before the first interest payment.

• A) $1,014.
• B) $1,055.
• C) $888.
• D) $1,025.
• E) $1,000.

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