Which of the Following Amounts Is Closest to the Present

question 63

Multiple Choice

Which of the following amounts is closest to the present value of a bond with coupon payment of $80 and a face value of $1,000? Interest payments are made at the end of each of 2 years, and the bond matures in 2 years. The spot interest rate for the first year is 10%, and the spot interest rate for the second year is 12%.

• A) $910
• B) $934
• C) $949
• D) $1,000

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Definitions:

Financial Accounting

The field that focuses on the preparation and reporting of financial statements for external use by investors, regulators, and other stakeholders.

Managerial Accounting

The field of accounting that focuses on providing information to managers for use in planning, decision making, and operational control.

Managerial Accounting

This involves the steps of recognizing, assessing, scrutinizing, decoding, and sharing monetary details with management to facilitate the attainment of organizational aims.

Budget

A financial plan outlining an organization's revenue, expenditures, and capital for a specific period, guiding financial management and priorities.