A Bond Pays Semiannual Interest Payments of $37

question 83

Multiple Choice

A bond pays semiannual interest payments of $37.50. What is the coupon rate if the par value is $1,000?

• A) 3.75 percent
• B) 4.50 percent
• C) 6.80 percent
• D) 7.50 percent
• E) 10.38 percent

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Definitions:

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance premiums.

Price Taker

An entity that accepts market prices as given, without having influence to change the price by its own actions.

Buyer

An individual or entity that purchases goods or services for personal use or ownership rather than for reselling or producing other goods and services.

Seller

An individual or entity that offers goods or services for sale to consumers or other businesses.