If the Principal of a Bond Is €1000, It Matures

question 32

Multiple Choice

If the principal of a bond is €1000, it matures in a year and the interest rate is 6%, then at the end of the year the lender will receive:

• A)€1000.
• B)€1060.
• C)€60.
• D)€940.

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Definitions:

Dividends

Payments made by a corporation to its shareholder members, usually derived from profits.

Risk-Adjusted

A process or methodology that adjusts for the risk involved in a project or investment, allowing for more accurate comparisons or evaluations.

Equity Cost

The total expenses involved in acquiring equity financing, including direct costs like underwriting fees and indirect costs such as stock dilution.

Price/Earnings Ratios

A valuation metric for evaluating the relative attractiveness of a company's stock, calculated by dividing the market price per share by its earnings per share.