If You Purchase a Three-Year, 9% Coupon Bond for $950

question 15

Multiple Choice

If you purchase a three-year, 9% coupon bond for $950, how much could it be sold for two years later if interest rates have remained stable?

• A)$964.95
• B)$981.56
• C)$983.33
• D)$1,000.00 Using the BAII Plus calculator:

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Definitions:

Economic Profit

The difference between a firm's total revenues and its total costs, including both explicit and implicit costs, indicating the financial gain in excess of opportunity costs.

Accounting Profit

The total revenue of a firm less its explicit costs; the profit (or net income) that appears on accounting statements and that is reported to the government for tax purposes.

Diseconomies of Scale

A situation in which a company or business grows so large that the costs per unit increase, leading to decreased efficiency.

Large-Scale Business

A business that operates on a large scale, often involving extensive operations, significant capital, numerous employees, and a wide geographical reach.