The Yield on a Bond Is That Interest Rate for Which

question 14

Multiple Choice

The yield on a bond is that interest rate for which the present value of the interest and principal payments promised by the bond are

• A)equal.
• B)as large as possible.
• C)equal to the price of the bond.
• D)equal to the face value of the bond.

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Definitions:

Useful Life

The estimated period over which an asset is expected to be useful in the operations of a business before it is fully depreciated.

Broker Commission

A fee paid to a broker for executing a transaction or providing specialized services.

Acquisition Cost

The total cost associated with purchasing an asset, including the price and all other costs to prepare the asset for use.

Salvage Value

The anticipated amount an asset will fetch when sold at the conclusion of its useful lifespan.