Your Client Has Been Offered a 5-Year,$1,000 Par Value Bond

question 115

Multiple Choice

Your client has been offered a 5-year,$1,000 par value bond with a 10 percent coupon.Interest on this bond is paid quarterly.If your client is to earn a simple rate of return of 12 percent,compounded quarterly,how much should she pay for the bond?

• A) $800
• B) $926
• C) $1,025
• D) $1,216
• E) $981

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Definitions:

Earnings Per Share

A financial metric that measures the portion of a company's profit allocated to each outstanding share of common stock.

Price Earnings Ratios

A valuation metric for stocks, calculated by dividing the current market price of a stock by its earnings per share (EPS).

Growth Models

Economic theories that explain how economic growth occurs in the long-term by focusing on factors like savings, investment, and technological innovation.

Technical Analyst

A professional who evaluates securities by analyzing statistics generated by market activity, such as past prices and volume.