Suppose That the Price of a Bond Is Equal to the Sum

question 244

Multiple Choice

Suppose that the price of a bond is equal to the sum of the present value of its future payments.Suppose further that this bond pays $50 in one year and $1,050 in two years.What is the price of the bond if the interest rate is 5 percent?

• A)$1,050.00
• B)$1,045.35
• C)$1,000.00
• D)$945.35

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