You Want to Buy a Bond That Has a Quoted

question 85

Multiple Choice

You want to buy a bond that has a quoted price of $897. The bond pays interest semiannually on March 1 and September 1. The coupon rate is 8%. What is the clean price of the bond if today's date is May 1? For simplicity assume a 360-day year.

• A) $897.00
• B) $903.35
• C) $780.13
• D) $910.33
• E) $917.00

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Definitions:

Relevant Range

The range of activity within which the assumptions about fixed and variable cost behavior are valid.

High-low Method

A way to estimate the cost-behavior formula that uses the highest and lowest levels of activity to determine fixed and variable costs.

Activity Index

A measure or indicator used to gauge activity levels within a particular domain, such as manufacturing or stock trading volume.

Process Cost System

A cost accounting system used when a company manufactures a large volume of similar products.