Your Company Issues a 5-Year Bond with a Face Value

question 77

Multiple Choice

Your company issues a 5-year bond with a face value of $10,000 and a stated interest rate of 7%.The market interest rate is 5%.The issue price of the bond is calculated as the present value of:

• A)$10,000 in 5 years plus the present value of $700 a year for 5 years.
• B)$700 paid once a year for 5 years.
• C)$10,000 to be paid in 5 years.
• D)$10,000 in 5 years minus the present value of $700 a year for 5 years.

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Definitions:

Longitudinal Method

A research design in which the same subjects are observed or studied over a long period to observe changes or development.

Neonates

Newborn babies, especially those less than four weeks old.

Visual Acuity

The sharpness of vision, measured by the ability to discern letters or numbers at a given distance according to a fixed standard.

Formal Operations

The fourth and final stage in Piaget's theory of cognitive development, characterized by the ability to think abstractly and reason logically.