Gong Li Has Recently Inherited $10,000 and Is Considering Purchasing

question 94

Essay

Gong Li has recently inherited $10,000 and is considering purchasing 10 bonds of the Lucky Corporation. The bond has a par value of $1,000 with 10 percent coupon rate and will mature in 10 years. Does Gong Li have enough money to buy 10 bonds if the required rate of return is 9 percent?

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Definitions:

Synclines

Downward-curving folds in sedimentary strata, opposite of anticlines, which can also be indicators of oil and gas deposits.

Cleavage

In geology, the tendency of crystalline materials to split along definite crystallographic structural planes, creating flat, shiny surfaces.

Monocline

A geological feature where sedimentary layers are tilted or bent along a single axis.

Strike-Slip Fault

A type of fault where the movement is predominantly horizontal, caused by shear stress, often resulting in earthquakes.