A Bond Will Pay $40 of Interest at the End

question 24

Multiple Choice

A bond will pay $40 of interest at the end of each of the next five years, plus the principal of $1,000 at the end of year five. If the required yield-to-maturity is 5% and the present market price is $935, the NPV is

• A) -$22.
• B) $41.
• C) +$ 8.
• D) +$22.

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Definitions:

Development of Alliances

The strategic process of creating formal relationships or partnerships between organizations to achieve mutual goals or to gain competitive advantages.

Specific Environment

The part of the environment that is directly relevant to an organization, including customers, suppliers, competitors, and government regulations.

Government Agencies

Organizations established by a government to administer legislation and implement public policy in specific areas.

Legal-Political Conditions

The framework of laws and political climate within which individuals, organizations, and businesses operate.