You Are Contemplating the Purchase of a 20-Year Bond That

question 72

Multiple Choice

You are contemplating the purchase of a 20-year bond that pays $50 in interest each six months.You plan to hold this bond for only 10 years,at which time you will sell it in the marketplace.You require a 12 percent annual return,but you believe the market will require only an 8 percent return when you sell the bond 10 years hence.Assuming you are a rational investor,how much should you be willing to pay for the bond today?

• A) $1,126.85
• B) $1,081.43
• C) $737.50
• D) $927.68
• E) $856.91

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Definitions:

Emotions

complex psychological states involving physiological arousal, expressions, and cognitive interpretations that influence behavior and decision-making.

Sociological Theory

A framework for understanding society and human behavior, focusing on how individuals interact within cultural, institutional, and structural contexts.

Emotions

Emotions are complex psychological states involving an individual's subjective experience, physiological response, and behavioral or expressive response.

Emotion Management

The practice of controlling and managing one's feelings and emotional reactions in various situations.