Susan Wants a 120-Day Extension on a Payment of $2,000

question 4

Multiple Choice

Susan wants a 120-day extension on a payment of $2,000. If she and her creditor agree that money can now earn 6%, what amount should she pay at the later date?

• A) $1,961.31
• B) $2,038.69
• C) $2,079.95
• D) $2,039.45
• E) $2,080.55

---

Definitions:

Yield To Maturity

The total return anticipated on a bond if held until it matures, including all interest payments and the repayment of principal.

Bond's Value

The present worth of a bond's future interest payments and its repayment of principal at maturity, adjusted for current market interest rates.

9-Year Duration

A metric indicating the sensitivity of a bond's price to changes in interest rates, represented here as the bond having an average response over a nine-year period.

Default Risks

The likelihood that a borrower will fail to meet the obligations of paying back a loan or interest payments.