On January 1,2014,bonds with a Face Value of $100,000 Were

question 154

Multiple Choice

On January 1,2014,bonds with a face value of $100,000 were sold.The bonds mature on January 1,2024.The stated rate of interest is 8%.The bonds pay interest semiannually on July 1 and January 1.The market rate of interest is 10%.What is the market price of the bonds? The present value of 1 for 20 periods at 5% is 0.377.The present value of an ordinary annuity of $1 for 20 periods at 5% is 12.462.The present value of 1 for 20 periods at 4% is 0.456.The present value of an ordinary annuity of $1 for 20 periods at 4% is 13.59.

• A)$87,548
• B)$92,346
• C)$99,960
• D)$100,000

Comprehend information literacy including evaluating online data for bias, reliability, and currency.

Recognize the importance of intellectual property rights and ways to avoid infringement.

Understand the public domain and its implications for using copyrighted material.

Differentiate between secure and non-secure online transactions.

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Definitions:

Duration

A measure of the sensitivity of the price of a bond or other debt instrument to changes in interest rates, often used as an indication of interest rate risk.

Coupon Bond

A type of bond that pays the holder a fixed interest rate (the coupon) at regular intervals until the bond matures, when the principal amount is repaid.

Zero-Coupon Bond

A debt security that doesn't pay interest (a coupon) but is traded at a deep discount, offering profit at maturity when the bond is redeemed for its full face value.

Duration

A measure of the sensitivity of the price of a bond or other debt instrument to changes in interest rates.