You Have Two Bonds,both with a Face Value of $7,000

question 105

Multiple Choice

You have two bonds,both with a face value of $7,000.One of them matures one year from today,while the other matures one year after that.If the interest rate is 8 percent (0.08) per year,what is the difference in value between the two bonds?

• A)$480.11
• B)$578.52
• C)$317.46
• D)zero
• E)$925.92

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Definitions:

Regulatory Capture

A form of government failure that occurs when a regulatory agency tasked with acting in the public's interest instead acts in favor of the commercial or special interests of the industry or sector it is charged with regulating.

Global Competitiveness

The ability of a country or company to compete effectively and successfully in international markets.

Consumer Safety

Measures and regulations aimed at preventing harm to consumers and ensuring that the products they use are free from dangerous defects.

Rent Seeking

An economic concept referring to the practice of individuals or firms using their resources to gain government favors or advantages without creating new wealth, often through lobbying or other non-productive means.