If $1,000,000 of 8% Bonds Are Issued at 105, the Amount

question 1

Multiple Choice

If $1,000,000 of 8% bonds are issued at 105, the amount of cash received from the sale is

• A) $1,080,000
• B) $950,000
• C) $1,000,000
• D) $1,050,000

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Definitions:

Elastic Demand

A situation where the quantity demanded of a product changes significantly in response to a change in price.

Substitutes

Products or services that can be used in place of each other; an increase in the price of one leads to an increase in demand for the other.

Available

Referring to resources or goods that are obtainable and can be utilized.

Perfectly Price Elastic

This refers to a situation where the demand for a product or service changes infinitely with a very small change in price.