If the principal amount of a bond is $10,000,000, the coupon rate is 7 percent, and the inflation rate is 4 percent, then the annual coupon payment made to the holder of the bond is:
A. $300,000.
B. $400,000.
C. $70,000.
D. $700,000.
Answer: D
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Automatic stabilizers "lean against the prevailing wind" of the business cycle because:
a. they include the power of special interests. b. the spending and tax multipliers are constant. c. federal expenditures and tax revenues change as the level of real GDP changes. d. wages are controlled by the minimum wage law.
Which of the following is correct?
a. The GDP deflator is better than the CPI at reflecting the goods and services bought by consumers. b. The CPI is better than the GDP deflator at reflecting the goods and services bought by consumers. c. The GDP deflator and the CPI are equally good at reflecting the goods and services bought by consumers. d. The GDP deflator is more commonly used as a gauge of inflation than the CPI is.
Which of the following examples is most likely part of the underground economy?
a. Sam opens a hot dog stand at a busy intersection of a city. b. Avery trades in a used car to an automobile dealership. c. Hudson earns money going from house to house offering to shovel snow. d. Chloe sells official team souvenirs outside of a ballpark.
Which of the following is NOT among the pressures imposed by the fixed-rate system on the government of a country that has ongoing international payments deficits?
A. The country faces a limit on its ability to sustain deficits. B. The country's money supply increases substantially resulting in a higher inflation. C. The country suffers deterioration in its creditworthiness. D. If the country cannot sterilize, then its money supply will decrease.