Zappo Corporation Just Issued $1,000 Face Value Bonds That Will

question 13

Multiple Choice

Zappo Corporation just issued $1,000 face value bonds that will mature in 20 years and have a 7 percent coupon rate. Interest is paid semi-annually, and the required rate of return is 9 percent for these bonds. The bonds have a five-year call provision that will pay a call premium of $1,050 if they are called in. What is the price of the Zappo Corporation bond?

• A) $815.98
• B) $817.43
• C) $826.35
• D) $920.87
• E) $953.07

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Definitions:

Instability

A situation characterized by a lack of stability, predictability, or consistency, often leading to chaos or disorder in social, economic, or political contexts.

Truman Doctrine

A U.S. foreign policy established in 1947, asserting that the U.S. would provide economic and military aid to countries threatened by communism, marking the start of the Cold War era containment strategy.

Mr. X Article

The Mr. X Article, also known as "The Sources of Soviet Conduct," was an influential 1947 essay written by George F. Kennan under the pseudonym "Mr. X," outlining the strategy of containment of Soviet expansion.

Containment Doctrine

A foreign policy strategy aimed at preventing the spread of communism by providing economic and military aid to countries threatened by Soviet expansion.