Suppose That You Just Purchased a $1,000 Treasury Inflation-Indexed Bond

question 34

Multiple Choice

Suppose that you just purchased a $1,000 Treasury Inflation-Indexed Bond which carried an original interest rate of 3.375%.The consumer price index just increased by 5% increasing the par value of the bond to $1,050.What is your interest payment considering this change?

• A)$31.75
• B)$33.75
• C)$35.44
• D)$50.00
• E)$52.50

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Definitions:

Price Discrimination

A pricing strategy where a company charges different prices for the same product or service based on various criteria like customer location, purchasing power, or quantity bought.

Vertical Price Fixing

An agreement among participants on different levels of the same supply chain to control prices passed on to consumers.

Tying Arrangement

A business agreement in which the sale of one product or service is linked to the purchase of an additional product or service.

Exclusive Dealing

A sales strategy where a seller requires a buyer to purchase only its products and not those of competitors.