Assume That You Are Considering the Purchase of a $1,000

question 27

Multiple Choice

Assume that you are considering the purchase of a $1,000 par value bond that pays interest of $70 each six months and has 10 years to go before it matures.If you buy this bond,you expect to hold it for 5 years and then to sell it in the market.You (and other investors) currently require a simple annual rate of 16 percent,but you expect the market to require a rate of only 12 percent when you sell the bond due to a general decline in interest rates.How much should you be willing to pay for this bond?

• A) $842.00
• B) $1,115.81
• C) $1,359.26
• D) $966.99
• E) $731.85

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Definitions:

Strategy Map

A visual representation of an organization's strategies, showing the cause-effect relationship between strategic objectives.

Visual Representation

The use of diagrams, drawings, or other visual formats to present information or data clearly and effectively.

Organisation's Objectives

The specific, measurable goals that a company aims to achieve in order to fulfill its mission and vision.

Standard Costs

Predetermined costs that are established as benchmarks for measuring performance.