The Price of a Bond with No Expiration Date Is

question 123

Multiple Choice

The price of a bond with no expiration date is $10,000 and it has a fixed annual interest payment of $2,000.If the bond is sold to a new owner for a price of $12,500, then the effective interest rate yield on the bond is now:

• A)22 percent.
• B)18 percent.
• C)17 percent.
• D)16 percent.

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