A Bond with the Term of 20 Years, Face Value

question 40

Multiple Choice

A bond with the term of 20 years, face value of $5,000, a coupon rate of 8%, compounded quarterly and payments 4 times a year, was issued 15 years ago. Currently, interest rates are at 12%. What could the bond be sold for today?

• A) $4,279
• B) $4,471
• C) $4,853
• D) $5,047
• E) $4,256

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Definitions:

Nobles of the Robe

French nobility who gained their titles by serving in the judicial or administrative branches, as opposed to inheriting them.

Inherited Titles

Titles of nobility or honor passed down through generations within families, often associated with specific duties, privileges, or estates.

Bought Titles

The practice of purchasing noble titles, historically common in some societies, allowing individuals to gain nobility status through financial means.

Despotic Practice

Actions or policies of a ruler or government exhibiting absolute power and often cruel, oppressive, or tyrannical control over its subjects.