A Three-Year, $1,000 Bond Will Pay $100 in Interest at the End

question 43

Multiple Choice

A three-year, $1,000 bond will pay $100 in interest at the end of each year. With a yield-to-maturity of 8%, its present market price is $1,052. Its duration is

• A) 2.74 years.
• B) 3.12 years.
• C) 2.52 years.
• D) 1.45 years.

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Definitions:

Genuinely Agreed

Describes a situation where parties involved in an agreement or contract have a mutual understanding and acceptance of the terms without duress or deception.

Unilateral Mistake

A mistake that occurs when one party to a contract is mistaken as to a material fact.

Relief

Aid or assistance offered to alleviate hardship or distress in various contexts, such as financial relief or emergency relief efforts.

Unilateral Mistake

A misunderstanding or error made by one party in a contract, which does not necessarily void the contract unless it significantly affects the terms.