Kim Back Invested $20,000 One Year in Corporate Bonds

question 25

Multiple Choice

Kim Back invested $20,000 one year in corporate bonds. Each bond sold for $1,000 and earned a coupon payment of $80 each during the year. The price of the bond at the end of the year dropped to $980. Which of the following is Kim's investment percent return on each bond?

• A) −2%
• B) 6%
• C) 4%
• D) −6%

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Definitions:

Weber's Law

A principle that states the smallest change in a stimulus, such as weight or brightness, that can be detected is a constant proportion of the original stimulus's intensity.

Differential Threshold

The smallest detectable difference between two stimuli or the minimum change in intensity that a person can detect.

Marketers

Professionals or organizations responsible for promoting, selling, and distributing products or services to customers.

Absolute Threshold

The minimum stimulus intensity that an organism can detect half the time.