An Insurance Company Purchases Corporate Bonds in the Secondary Market

question 21

Multiple Choice

An insurance company purchases corporate bonds in the secondary market with six years to maturity. Total par value is $55 million. The coupon rate is 11 percent, with annual interest payments. If the expected required rate of return in 4 years is 9 percent, what will the market value of the bonds be then?

• A)$52,115,093
• B)$55,341,216
• C)$55,000,000
• D)$56,935,022

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Definitions:

Official Objectives

Formal goals or aims that an organization or project intends to achieve, as publicly stated or documented.

Core Values

Fundamental beliefs or principles that guide an individual's or organization's actions and decision-making processes.

Corporate Subcultures

Subgroups within an organization that have their own distinct values, norms, and behaviors which may differ from the company's main culture.

Functional Values

The practical or useful aspects of a product or service that fulfill consumers' needs or requirements.