A 20-Year Bond Pays 6% Annually on a Face Value

question 82

Multiple Choice

A 20-year bond pays 6% annually on a face value of $1,000. If similar bonds are currently yielding 4%, what is the market value of the bond?

• A) $1,271.40
• B) $573.50
• C) $770.80
• D) Not enough information is given to tell.

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Definitions:

Process Costing

An accounting methodology used for homogenous products, allocating production costs based on processing departments or cycles.

Conversion Costs

The costs incurred in the process of converting raw materials into finished goods, typically including direct labor and manufacturing overhead.

Cutting Department

A specific section within a manufacturing facility where materials (often fabric) are cut to size before being assembled into final products.

Equivalent Unit

A concept in cost accounting used to apportion costs among finished goods and goods in process, based on work completed.