A 20-Year Bond Pays 6% on a Face Value of $1,000

question 7

Multiple Choice

A 20-year bond pays 6% on a face value of $1,000. If similar bonds are currently yielding 5%, what is the market value of the bond? Use annual analysis.

• A)Over $1,100
• B)Under $1,000
• C)Under $900
• D)Not enough information is given to tell.

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Definitions:

Practice Effect

A situation in which individuals improve their scores across test administrations as a result of increased familiarity and comfort with a test and the content that is being assessed.

Fatigue

A situation where clients tire from multiple administrations of a test and their performance decreases as they grow weary of the testing process.

Measurement Error

The difference between the actual value and the measured value due to limitations or inaccuracies in measurement tools or processes.

Test-Retest

A method of assessing the reliability of a test by administering the same test to the same subjects at two different points in time and comparing the scores.