Your Grandparents Have Just Given You a $50,000 Savings Bond

question 185

Multiple Choice

Your grandparents have just given you a $50,000 savings bond that matures in 20 years. If the discount rate is 10%, what did they pay for the bond?

• A)$7,450
• B)$8,175
• C)$8,900
• D)$1,490

Identify factors that influence the likelihood of engaging in System II thinking.

Analyze the impact of cognitive biases on judgment and decision-making.

Understand the role of intuition and analysis in cognitive processes.

Describe the implications of dual-process theory for understanding human judgment and decision-making.

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Definitions:

Zero-Coupon Bond

A bond that does not pay interest during its life but is sold at a discount from its redemption value.

Interest Paid

The amount of money paid over a period for the use of borrowed funds.

Issue Price

The price at which new or existing securities are offered for sale to the public.

Disaster Bonds

Financial instruments that are issued to provide insurance companies with liquidity in the event of a disaster, transferring the risk to investors.