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The Price of a Bond with No Expiration Date Is

question 129

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The price of a bond with no expiration date is $1,000 and the fixed annual interest payment is $100.If the price of the bond falls to $800, the interest rate to a new buyer of the bond is now 8.5 percent.


Definitions:

Translation Rate

The rate used to convert financial statements of a foreign operation into the presentation currency of the reporting entity.

Foreign Currency

Currency that is used in a country other than the one where a company or individual is based.

Foreign Exchange

The conversion of one country's currency into another currency.

Functional Currency

The currency of the primary economic environment in which the entity operates and reports its financial statements.

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