Suppose a Google

question 105

Multiple Choice

Suppose a Google.com bond will pay $4, 500 ten years from now.If the going interest rate on safe 10-year bonds is 4.25%, how much is the bond worth today?

• A) $2, 819.52
• B) $2, 967.92
• C) $3, 116.31
• D) $3, 272.13
• E) $3, 435.74

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Definitions:

Corporation

A legal entity that is separate from its owners, providing limited liability protection to its shareholders and having the ability to raise capital by selling shares.

Held

Usually refers to assets or investments retained over a period, not sold or traded.

Capital Surplus

The amount by which a company's total capital exceeds the par value of its issued share capital.

Paid-in Capital

Funds raised by a company through the sale of common or preferred stock.