If a Four-Year Bond with a 7 Percent Coupon and a 10

question 125

Multiple Choice

If a four-year bond with a 7 percent coupon and a 10 percent yield to maturity is currently worth $904.90, how much will it be worth one year from now if interest rates are constant?

• A)$904.90
• B)$925.39
• C)$947.93
• D)$1,000.00 Using the BAII Plus Calculator:

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Definitions:

Unit Tax

A tax that is imposed on a per unit basis, meaning that a specific amount is taxed for each unit of a good or service sold.

Total Costs

The total of variable and fixed expenses a business faces during the manufacturing of products or delivery of services.

Inverse Demand Function

Expresses the price of a good or service as a function of the quantity demanded, illustrating how price varies with changes in demand.

Unit Tax

A fixed amount of tax imposed on a product or service, regardless of its price.