If You Held a Bond with Face Value of $10

question 49

Multiple Choice

If you held a bond with face value of $10 000 maturity in 12 years,semi-annual coupon of 6 percent,and the coupons on par value bonds with the same maturity today are 3 percent,how much would your bond be worth now on the secondary market?

• A)$10 000
• B)$13 005
• C)$19 781
• D)$14 908

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Definitions:

Investment Decisions

The process of choosing which assets or projects to invest in, with the aim of maximizing returns or value over time.

Uncertainty

A condition characterized by a lack of comprehensive information, making it unfeasible to precisely portray the current situation, predict future events, or identify multiple potential results.

Marginal Revenue Product

The additional revenue generated from employing one more unit of a relevant resource or factor of production.

Rental Cost

The expense incurred from hiring or leasing a property or equipment.