Suppose a State of New Mexico Bond Will Pay $1,000

question 96

Multiple Choice

Suppose a State of New Mexico bond will pay $1,000 eight years from now.If the going interest rate on these 8-year bonds is 5.5%, how much is the bond worth today?

• A) $651.60
• B) $684.18
• C) $718.39
• D) $754.31
• E) $792.02

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Definitions:

Rate Of Return

Financial advancement or recession in the value of an investment over a prescribed time frame, stated as a percentage of the initiating investment.

Financing Balance

Represents the outstanding amount in a financing arrangement that has yet to be repaid.

Monthly Payments

Regular payments made once a month, often related to loans or leases.

Loan Payment

A specified amount of money an borrower must pay to a lender at regular intervals as repayment for borrowing money.