Refer to the Information Provided in Table 11

question 79

Multiple Choice

Refer to the information provided in Table 11.1 below to answer the questions that follow.
Table 11.1

-Refer to Table 11.1.If it costs $11 each time a bond is sold,the optimal average money holdings are

• A)$600.
• B)$400.
• C)$300.
• D)$200.

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Definitions:

Term of Loan

The period over which a loan agreement is in effect, at the end of which the loan must be repaid in full.

Nominal Rate

The stated interest rate on a loan or financial product, not accounting for inflation or compounding effects.

Term of Loan

The length of time over which the loan is scheduled to be repaid.

Compounded Annually

The process of earning interest on both the initial principal and the accumulated interest from previous periods, calculated once a year.