To Determine the Present Value of a Bond That Pays

question 41

Multiple Choice

To determine the present value of a bond that pays semiannual interest, which of the following adjustments should not be made to compute the price of the bond?

• A) The annualized coupon should be split in half.
• B) The annual discount rate should be divided by 2.
• C) The number of annual periods should be doubled.
• D) The par value should be split in half.
• E) All of the above adjustments have to be made.

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Definitions:

Rayed Crater

A type of crater characterized by radiating lines or bands of debris thrown out by the impact that formed the crater.

Mare

A dark, low-lying, relatively smooth area on the Moon consisting of basalt.

Lunar Highlands

Rough, mountainous regions on the moon's surface, characterized by their lighter color and higher altitude than the lunar maria.

Mare

Latin for "sea," often used to describe the large, dark basaltic plains on the Moon, formed by ancient volcanic eruptions.