A Bond Has a Coupon Rate of 6% Paid Semi-Annually

question 12

Multiple Choice

A bond has a coupon rate of 6% paid semi-annually, a par value of $1000, and matures tomorrow.The bond will sell for [blank].

• A)approximately $1030
• B)approximately $1000
• C)approximately $1060
• D)The price cannot be estimated without knowing the market rate of interest

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Definitions:

Inflation Expectations

Consumers' and investors' predictions about future inflation rates, which can influence economic decisions and actual inflation through their impact on wages, prices, and interest rates.

Short-run Phillips Curve

A graphical representation showing an inverse relationship between the rate of inflation and the rate of unemployment in an economy over the short-term.

Short-run Phillips Curve

A curve that illustrates an inverse relationship between the rate of inflation and the rate of unemployment for a given period, assuming other factors remain constant.

Inflation Expectations

The expected pace of future price increases, impacting how individuals choose to save and spend money.