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The Current Required Rate of Return on a Bond Issued

question 26

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The current required rate of return on a bond issued by Who LTD is 11 percent. "Who" has a bond issue outstanding that pays interest semiannually, is selling for $845, and matures in 8 years. What is the approximate coupon rate on the outstanding bond?


Definitions:

Peripheral Route Persuasion

A method of persuasion that relies on superficial cues or associations, such as attractiveness or celebrity endorsement, rather than logical argumentation.

Attributions

Inferences that people make about the causes of events, others' behavior, or their own behavior.

Foot-In-The-Door Phenomenon

A tactic that involves getting a person to agree to a small request to increase the chances they will agree to a larger request later.

Fundamental Attribution Error

The tendency for people to over-emphasize personality-based explanations for behaviors observed in others while under-emphasizing situational explanations.

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