One Year Before Maturity, the Price of a Bond with a Principal

question 130

Multiple Choice

One year before maturity, the price of a bond with a principal amount of $1,000 and a coupon rate of 5% paid annually fell to $981.The one-year interest rate must be:

• A)8.5%.
• B)7.0%.
• C)5.0%.
• D)1.9%.

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