You Are Offered a $1,000 Par Value Bond Which Has

question 91

Multiple Choice

You are offered a $1,000 par value bond which has a stepped-up coupon interest rate.The annual coupon rate is 10 percent coupon,payable semiannually ($50 each 6 months) for the first 15 years,and then the annual coupon increases to 13 percent,also payable semiannually,for the next 15 years.The first interest payment will be made 6 months from today,and the $1,000 principal amount will be returned at the end of Year 30.You currently have savings in an account which is earning a 9 percent simple rate,but with quarterly compounding;this is your opportunity cost for purposes of analyzing the bond.What is the value of the bond to you today?

• A) $1,614.53
• B) $1,419.18
• C) $1,306.21
• D) $1,250.25
• E) $1,155.98

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Aid to Families

Programs providing financial or other assistance to families, often targeting housing, healthcare, or income support.

Dependent Children

Individuals, typically under the age of 18, who rely on adults for financial support and care.

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Taxes applied to specific goods, services, or activities, either as a flat amount per unit or as a percentage of the price.

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