A Five Year Promissory Note with a Face Value of $5000

question 119

Multiple Choice

A five year promissory note with a face value of $5000, bearing interest at 6% compounded semi-annually, was sold 18 months after its issue date to yield the buyer 4% compounded quarterly. What amount was paid for the note?

• A) $6719.58
• B) $5845.79
• C) $5463.64
• D) $4753.16
• E) $4349.82

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Definitions:

Positive Reinforcement

A behavior modification method in psychology that involves rewarding desirable behaviors to increase the likelihood of their recurrence.

Punishment

A method used to reduce the occurrence of an undesirable behavior by applying an adverse stimulus or removing a positive stimulus.

Long Run

A period of time sufficient for all variables within an economic model or business scenario to be adjusted, not confined by fixed constraints.

Effective

Being successful in producing a desired or intended result.