If the final expressions in a present value equation used to calculate the price of a bond you are considering buying are "[$50 / (1 + .08)3] + [$500 / (1 + .08)3]," which of the following is correct?
A) The face value is $500, the coupon is $50, and the coupon will mature in 3 years.
B) The face value is $50, the interest rate you need is 8 percent, and the coupon will mature in 3 years.
C) The coupon is $50, the interest rate you need is 1.08 percent, and the coupon will mature in 3 years.
D) The face value is $500, the interest rate you need is 3 percent, and the coupon will mature in 8 years.
A
You might also like to view...
Based on the figure above, the aggregate demand curve will shift from AD0 to AD1 when
A) the Federal Reserve lowers the interest rate. B) government expenditure decreases. C) the price level falls. D) the price level rises. E) potential GDP increases.
If oranges sell for $100 per crate in the United States and 4000 pesos per crate in Mexico, the law of one price indicates that you should be able to exchange $1 for
A) 0.025 peso. B) 4 pesos. C) 40 pesos. D) 400 pesos.
If a competitive firm cannot earn a profit at any level of output during a given short-run period, then which of the following is FALSE?
A) It will shut down in the short run and wait until the price increases sufficiently. B) It will exit the industry in the long run. C) It will operate at a loss in the short run. D) It will minimize its loss by decreasing output so that price exceeds marginal cost.
Tammy installed a set of wind chimes in her backyard. She enjoys listening to the musical tones when the breeze hits them. Her neighbor Steven also enjoys the chimes, but her other neighbor Sally hates the constant noise. Tammy's wind chimes:
a. create a negative externality for Steven and a positive externality for Sally. b. are not related to the issue of property rights since all parties are homeowners. c. are an example of an efficient market since the benefits to one party are balanced by costs to another party. d. are a public good because all three parties can hear the wind chimes. e. create a positive externality for Steven and a negative externality for Sally.