Interest Payments Determine the Interest Payment for the Following Three

question 127

Multiple Choice

Interest Payments Determine the interest payment for the following three bonds: 2½ percent coupon corporate bond (paid semi-annually) , 3.15 percent coupon Treasury note, and a corporate zero coupon bond maturing in 10 years. (Assume a $1,000 par value.)

• A) $2.50, $3.15, $0, respectively
• B) $12.50, $15.75, $0, respectively
• C) $12.50, $15.75, $100, respectively
• D) $25.00, $31.50, $0, respectively

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Definitions:

Cash Outflows

Money or cash disbursed by the business for various purposes, such as paying expenses, investing in assets, or repaying debts.

Cash Inflows

Money received by a business from its various activities, including sales, financing, and investments.

Discounting

The process of determining the present value of a payment or a stream of payments that is to be received in the future.

Future Amount

The projected value of a current asset or amount of money at a specified future date, taking into account factors like interest or growth rates.