The Price of a Bond with No Expiration Date Is

question 239

Multiple Choice

The price of a bond with no expiration date is originally $5,000 and it pays an annual interest payment of $500.If the price of the bond falls to $3,000, then the effective interest rate yield to a new buyer of the bond is:

• A)14.4 percent.
• B)16.6 percent.
• C)11.0 percent.
• D)9.0 percent.

Identify key milestones and effects of the Industrial Revolution on global economic development.

Distinguish between types of economic changes, including technological advancements and their impact on productivity.

Analyze the role of economic policies, immigration, and regulatory changes in economic growth.

Understand the concepts of gross savings and productivity growth rates in different periods.

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Definitions:

MACRS

Modified Accelerated Cost Recovery System, a method of depreciation used for tax purposes in the United States to recover the cost of tangible property over its useful life.

Cost of Capital

The average rate of return a company must pay to its security holders to fund its assets, integrating the cost of debt and equity.

Incremental Cash Flows

The additional cash flow from taking on a new project, considered essential for analysis in capital budgeting.

Sunk Costs

Costs that have already been incurred and cannot be recovered or altered, not affecting future business decisions.