The Principal Amount of a Bond Is $65,000, Its Stated

question 62

Multiple Choice

The principal amount of a bond is $65,000, its stated rate is 7%, and the term of the bond is 5 years. The bond pays interest semiannually. At the time of issue, the market rate is 8%. Determine the present value of the bonds at issuance.

• A)$44,265
• B)$18,453
• C)$62,393
• D)$65,000

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Definitions:

Cross Section

A diagram representing the geology as a two-dimensional slice through the land. See also geologic cross section.

Cleaved Rocks

Rocks that have been split or sliced along very smooth, flat surfaces, often due to intense pressure.

Unconformity

A boundary between underlying and overlying rock strata representing a significant break or gap in the geologic record; an unconformity represents an interval of nondeposition or erosion, commonly accompanied by uplift.

Intrusive Contact

The boundary between intrusive igneous rocks and the surrounding country rock into which they have intruded.