A Three-Year Bond with a Principal Amount of $5,000,a 4

question 48

Multiple Choice

A three-year bond with a principal amount of $5,000,a 4% coupon rate paid annually,one year from maturity will sell for what price (rounded to the nearest dollar) in the bond market if interest rates are 5%?

• A) $4,762.
• B) $4,952.
• C) $5,000.
• D) $5,200.
• E) $5,460.

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Definitions:

Acquiescent Response

A tendency to agree with or accept something passively, rather than expressing one's own opinion or dissent.

Elaboration-Likelihood Model

A theory suggesting two primary pathways (central and peripheral) that influence the ability of a message to persuade.

Central Route

In persuasion theory, a cognitive route of information processing that involves deliberate analysis of the attributes and content of the message.

Peripheral Route

An approach to persuasion that influences people by incidental cues, such as a speaker's attractiveness or non-central message features, differing in focus from the central route.