The Present Value of a Two­year Bond with a Future

question 46

Multiple Choice

The present value of a two­year bond with a future payment of $1,345.50 and the yield to maturity of 3.6 percent is​

• A)​$1,300
• B)​$1,500.50
• C)​$1,253.62
• D)​$1,246.72

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Definitions:

Default Risk

The possibility that a borrower will fail to pay back a loan or meet contractual obligations.

Government of Canada Bond

A debt security issued by the Canadian government to support government spending.

Maturity Date

The specified date on which the final payment of a loan, bond, or other financial instrument must be paid in full.

Par Value

The face value of a bond or stock, as stated by the issuing company.