Question
1) Kyle B purchased a bond for $1,136.31 today. The bond has a 4.29% coupon rate. At the end of one year, just after you
1) Kyle B purchased a bond for $1,136.31 today. The bond has a 4.29% coupon rate. At the end of one year, just after you received the coupon, you decide to sell the bond. The best bid for your bond is $1,098.39. If you accept the best bid, what will your return be? (Express as a %, not a decimal. If your answer is 10%, just enter 10)
2) What is the cause of the Time Value of Money? Why is receiving $100 today not the same as receiving $100 tomorrow?
A. | Due to the existence of demand and supply of purchasing power | |
B. | Finance PhDs believe that saving money for tomorrow is more moral than spending it today. Hence, they are proselytizing their beliefs to young and impressionable college-going graduates so that more people act and behave like them. | |
C. | Texas Instruments wants to sell their calculators and successfully lobbied for including Time Value of Money in Finance education | |
D. | The Constitution of the US guarantees the right to demand interest from the Federal Reserve that is equal to or greater than the inflation rate. |
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