If a Bond Pays $50 Interest Semiannually with a Par

question 55

Multiple Choice

If a bond pays $50 interest semiannually with a par value of $1,000, its coupon rate is

• A) 5%.
• B) 10%.
• C) 15%.
• D) 20%.

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Definitions:

Utility Ratio

The comparison of the utility (satisfaction) received from one choice relative to another.

Capital Goods

Physical assets used by businesses to produce goods and services, such as machinery, buildings, and equipment.

Investment

In economics, spending for the production and accumulation of capital and additions to inventories.

Depreciation

The process of allocating the cost of a tangible asset over its useful life, representing how much of an asset's value has been used up over time.