A Bond Is Currently Selling for $910 and Has a Remaining

question 42

Multiple Choice

A bond is currently selling for $910 and has a remaining life of three years. It makes an annual coupon payment of $60 and has a par of $1,000. If the yield to maturity is 9%, what is the net present value of the bond?

• A) $24.06
• B) $14.06
• C) $9.83
• D) $18.57

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Definitions:

Respective Promises

Promises made by two or more parties where each party's promise is considered in regard to, or in relation to, the promises of the other party or parties.

Quasi-Contract

A legal concept where the court imposes a contractual obligation on a party who has not actually entered into a contract, to prevent unjust enrichment.

Mutual Assent

In contract law, the state of mind that exists between an offeror and an offeree once a valid offer has been accepted and once the parties know what the terms are and have agreed to be bound by them. Also known as “a meeting of the minds.”

Unenforceable Contract

A contract that cannot be upheld by a court because of some rule of law.