Consider an 20-Year Bond with a Coupon Rate of 8

question 8

Multiple Choice

Consider an 20-year bond with a coupon rate of 8% and a par value of $1,000. The cash flow for this bond is ________ every six months for the first 39 semi-annual periods and then ________ for the last (or 40th) six-month period.

• A) $1,040; $40
• B) $40; $1,040
• C) $80; $1,080
• D) $80; $1,000

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Definitions:

Monopoly

The exclusive control of a market by a business enterprise.

Market

A venue or mechanism where buyers and sellers interact to trade goods, services, or securities, determining prices through supply and demand.

Unlawful Tying Agreement

An unlawful tying agreement is a form of anti-competitive conduct where a seller requires the buyer to purchase a secondary product as a condition of buying a desired primary product.

Restriction

A limitation or condition placed on an action, activity, or process.