Marwick Corporation Issues 8%,5 Year Bonds with a Par Value

question 108

Multiple Choice

Marwick Corporation issues 8%,5 year bonds with a par value of $1,000,000 and semiannual interest payments.On the issue date,the annual market rate for these bonds is 6%.What is the bond's issue (selling) price,assuming the Present Value of $1 factor for 3% and 10 semi-annual periods is .7441 and the Present Value of an Annuity factor for the same rate and period is 8.5302?

• A)$1,000,000
• B)$789,244
• C)$1,341,208
• D)$1,085,308
• E)$658,792

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Definitions:

Elaboration Likelihood Model

A theory in social psychology that explains how attitudes are formed and changed through two routes of persuasion: central and peripheral.

Persuasion

The act of convincing someone to believe or do something through reasoning or argument.

Individual's Motivation

The internal and external factors that stimulate desire and energy in people to be continually interested and committed to a job, role, or subject.

Ability

The capacity or skill to do something effectively, such as solving problems, performing tasks, or adapting to situations.