Consider a Bond That Promises to Make Coupon Payments of $100

question 121

Multiple Choice

Consider a bond that promises to make coupon payments of $100 each year for three years (beginning in one year's time) and also repays the face value of $2000 at the end of the third year.If the market interest rate is 6%,what is the present value of this bond?

• A)$267.30
• B)$283.02
• C)$1763.22
• D)$1854.67
• E)$1946.53

---

Definitions:

Balance Sheet

A ledger entry detailing a business’s resources, debts, and equity ownership at a fixed point in time.

Adjustment

A modification made to an account or financial statement to correct an error or reflect new information.

Unearned Revenue

Money received by a company for goods or services that have yet to be delivered or provided.

Rental Payments

Periodic payments made by a lessee to a lessor for the use of a property, equipment, or other asset.