A Newly Issued Bond with a Face Value of $8,000

question 10

Multiple Choice

A newly issued bond with a face value of $8,000 and no coupon payments is priced at $7,000.The bond will mature in one year.What is the yield on this bond?

• A)$1,000
• B)12.5 percent
• C)14.3 percent
• D)$272.73
• E)It depends on the interest rate

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Definitions:

Maximise

To increase something to its greatest possible amount or degree.

Input

Resources such as labor, materials, and energy that are used in the production process of goods or services.

Production Function

A mathematical representation that describes the relationship between inputs used in production and the resulting output.

Output

The aggregate sum of products or services generated by a business, sector, or economic system.