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:

Owners' Equity

The residual interest in the assets of a company after deducting liabilities, representing what the owners or shareholders own outright.

Shares Outstanding

The complete count of a corporation's shares currently possessed by all its shareholders, which includes shares held in large blocks by institutional investors and those shares restricted to company insiders.

Reverse Stock Split

A corporate action in which a company decreases the number of its existing shares, which increases the share price proportionally, often done to meet stock exchange listing requirements.