ICX Company Has an Issue of Perpetual Bonds (Par Value

question 126

Multiple Choice

ICX Company has an issue of perpetual bonds (par value to $1,000) that pays 5% annual interest. Determine the yield (to the nearest tenth of 1 percent) if the bonds are currently selling for $625.

• A) 5.0%
• B) 8.0%
• C) 3.1%
• D) 6.25%

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Definitions:

Negative Price

A situation where the seller pays the buyer to take a good or service, typically seen in unusual market conditions or to address surplus issues.

Positive Price

A situation in which the price of a good or service is above zero, indicating value and demand in a market.

Budget Line

A depicted representation of all conceivable combinations of two commodities buyable with a certain amount of money at steady prices.

Price Of Good X

The amount of money required to purchase a specific quantity of Good X, reflecting its market value at a given time.