A Bank Buys Bonds with a Par Value of $25

question 74

Multiple Choice

A bank buys bonds with a par value of $25 million for $24,040,000. The coupon rate is 10 percent, and the bonds make annual payments. The bonds mature in four years. The bank wants to sell them in two years and estimates the required rate of return in two years will be 8 percent. What will the market value of the bonds be in two years? ​

• A)$24,113,418
• B)$24,667,230
• C)$25,000,000
• D)$25,891,632

---

Definitions:

United States

A country in North America founded in 1776, comprised of 50 states, known for its vast size and diversity.

Great Britain

A country located off the northwestern coast of mainland Europe comprising England, Scotland, Wales, and Northern Ireland, known for its influential role in global politics, economics, and culture.

Economic Interests

Concerns or investments that involve the financial well-being of individuals, groups, or nations, including trade, resources, and markets.

Expansionist Foreign Policy

A strategy by a country to increase its power and territory through acquisition or diplomatic efforts.