A Bond Has a $1 000 Face Value, 10 Years

question 81

Multiple Choice

A bond has a $1 000 face value, 10 years to maturity, and 7% semi-annual coupon payments. What would be the expected difference in this bond's price immediately before and immediately after the next coupon payment?

• A)$35
• B)$70
• C)$84
• D)$18

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Definitions:

Present Value

The current evaluation of a forthcoming cash amount or cash flow series, considering a specific rate of financial return.

Land Rent

Land rent is the payment made for the use of a piece of land, representing the value derived from its use.

Interest Payments

The payments made periodically by a borrower to a lender as compensation for the use of borrowed funds.

Interest Rates

The percentage of a sum of money charged for its use, determining the cost of borrowing money or the return on invested capital.