A Bond Offers an Annual Coupon Rate of 4%, with Interest

question 21

Multiple Choice

A bond offers an annual coupon rate of 4%, with interest paid semi-annually. The bond matures in two years. At a market discount rate of 6%, the price of this bond per 100 of Par value is closest to:

• A) 93.07.
• B) 96.28.
• C) 96.33.

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Definitions:

Annual Membership

A subscription or fee paid once a year to belong to a club, organization, or service, granting the member certain privileges, services, or access.

Crowded

A situation where a location or market is overly saturated with participants, leading to increased competition or decreased comfort.

Behavioral Economics

A field of economic research that examines how psychological, cognitive, emotional, cultural, and social factors affect economic decisions of individuals and institutions.

Marginal Benefit

The incremental benefit or enjoyment a consumer receives by using one more unit of a good or service.