A Bond Offers an Annual Coupon Rate of 5%, with Interest

question 1

Multiple Choice

A bond offers an annual coupon rate of 5%, with interest paid semi-annually. The bond matures in seven years. At a market discount rate of 3%, the price of this bond per 100 of Par value is closest to:

• A) 106.60.
• B) 112.54.
• C) 143.90.

---

Definitions:

Relative Income

The comparison of an individual's or household's income to the larger society, which can influence spending, saving, and lifestyle choices.

Redistributing Income

The process by which government policies or mechanisms transfer income from certain groups of individuals to others to promote economic equality.

Equality

The state of being equal, especially in status, rights, and opportunities.

Incentives

Motivations or rewards designed to engender specific behaviors or actions in economic agents.