Seaside Issues a Bond That Has a Stated Interest Rate

question 169

Multiple Choice

Seaside issues a bond that has a stated interest rate of 10%, face amount of $50,000, and is due in 5 years. Interest payments are made semi-annually. The market rate for this type of bond is 12%. What is the issue price of the bond?

• A) $83,920.
• B) $46,320.
• C) $53,605.
• D) $50,000.

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