The Return on a 5 Percent Coupon Bond That Initially

question 62

Multiple Choice

The return on a 5 percent coupon bond that initially sells for $1,000 and sells for $950 next year is

• A)-10 percent.
• B)-5 percent.
• C)0 percent.
• D)5 percent.

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Definitions:

Total Cost

The complete cost of production, including both fixed and variable costs, incurred by a firm in producing and selling a quantity of a good or service.

Variable Cost

Expenses that vary in relation to the amount of products or services a company generates.

Fixed Cost

Costs that do not change with the level of production or sales, such as rent, salaries, and loan repayments.

Economies of Scale

The cost advantages that a business can exploit by expanding their scale of production, leading to a lower cost per unit.