The Price of a Bond Having No Expiration Date Is

question 52

Multiple Choice

The price of a bond having no expiration date is originally $10 000 and has a fixed annual interest payment of $1000.A change in the interest rate to 6.67 percent will result in a bond price of:

• A)$16 667
• B)$6667
• C)$10 000
• D)$15 000
• E)$3333

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Definitions:

Liability Account

An accounting record that captures the amounts a company owes to others, including loans, payables, and other financial obligations.

Capital Account

An account on a national level that records transactions of assets, liabilities, and investments between domestic and foreign entities.

Understated

A term used when financial records show a figure to be less than the actual amount, indicating a discrepancy or error.

Asset Account

Accounts that represent the different types of resources owned by a business, which have economic value and can provide future benefits.