If You Own a $1,000 Face Value Bond with One

question 62

Multiple Choice

If you own a $1,000 face value bond with one year remaining to maturity and a 3 percent coupon rate and new bonds are paying 14 percent, what is the most you can get for your old bond?

• A)$903.51
• B)$997.19
• C)$1,000
• D)$1,140

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Definitions:

Hedonic

Relating to or considered in terms of pleasant (or unpleasant) sensations; often used in the context of hedonic consumption which refers to the utility derived from pleasure.

Linda Lundstrom

A Canadian fashion designer known for her innovative designs and contributions to the Canadian fashion industry.

Cognitive Dissonance

is the psychological discomfort experienced when holding two or more contradictory beliefs, values, or ideas, often leading to an alteration in beliefs or behaviors to reduce the dissonance.

Drive

An internal urge that motivates behavior towards satisfying a need or achieving a goal.