If the Principal Amount of a Bond Is $10,000,000, the Coupon

question 116

Multiple Choice

If the principal amount of a bond is $10,000,000, the coupon rate is 7%, and the inflation rate is 4%, then the annual coupon payment made to the holder of the bond is:

• A)$70,000.
• B)$300,000.
• C)$400,000.
• D)$700,000.

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Definitions:

Transfer Payment

A payment made by the government to individuals, without the government receiving any goods or services in return.

Shareholders

Individuals or entities that own shares in a corporation, giving them a claim on part of the corporation's assets and profits.

Inventories

Stocks of goods and materials a business holds for the purpose of resale or production.

Gross Domestic Product

Gross Domestic Product (GDP) is the total market value of all final goods and services produced within a country's borders in a given period, serving as a broad measure of a nation's overall economic activity.