Consider a Security with a Face Value of $100 000

question 9

Multiple Choice

Consider a security with a face value of $100 000, which is to be repaid at maturity.The security pays an annual coupon of 8% and has a maturity of three years.The current discount rate is 10%.What is the security's current price (round to two decimals) ?

• A)$124,000
• B)$95,026.30
• C)$19,894.82
• D)$100,000

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Definitions:

Excise Tax

A type of indirect tax imposed on specific goods, such as tobacco and alcohol, often with the aim of reducing their consumption or generating revenue.

Public Golf Courses

Golf facilities that are owned by a government entity and are open to the public, typically requiring payment of a fee for use.

Regressive Tax

A tax system where the tax rate decreases as the taxable amount increases, leading to a higher burden on lower-income individuals.

High-Income

A category used to describe individuals or households that earn significantly more money than the average for their area or country.