Use the Following Information to Answer the Next 4 Questions

question 8

Multiple Choice

Use the following information to answer the next 4 questions:
Discount-Mart issues $10 million in bonds on January 1,2015.The bonds have a ten-year term and pay interest semiannually on June 30 and December 31 each year.Below is a partial bond amortization schedule for the bonds:

-What is the stated annual rate of interest on the bonds? (Hint: Be sure to provide the annual rate rather than the six month rate. )

• A)3%.
• B)4%.
• C)6%.
• D)8%.

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Definitions:

Diversifiable Risks

Risks associated with individual investments that can be reduced or eliminated through portfolio diversification.

Individual Firm

An independently owned and operated company that is limited in size and in revenue depending on the industry.

Industry

Refers to a group of companies that are related based on their primary business activities.

Systematic Risk

The risk inherent to the entire market or market segment, which cannot be eliminated through diversification.