Consider the Following Two Bonds That Pay Interest Annually At a Market Discount Rate of 4%, the Price Difference

question 24

Multiple Choice

Consider the following two bonds that pay interest annually: $\begin{array} { l c c } \hline \text { Bond } & \text { Coupon Rate } & \text { Time-to-Maturity } \\\hline \text { A } & 5 \% & 2 \text { years } \\\text { B } & 3 \% & 2 \text { years } \\\hline\end{array}$ At a market discount rate of 4%, the price difference between bond A and bond b per 100 of par value is closest to:

• A) 3.70.
• B) 3.77.
• C) 4.00.

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GDP

Gross Domestic Product, a measure of the total economic output of a country.

United States

A country located primarily in North America, consisting of 50 states, a federal district, five major self-governing territories, and various possessions.

China

A country located in East Asia, the world's most populous nation, with a rich history, dynamic economy, and significant global influence.

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Refers to the death of children under the age of five.