A business purchases a bond investment on its payment date. The investment is a 18-year, 5.4 percent semi-annual coupon bond with a $35,000 face value. How much did the business pay for the bond if its yield-to-maturity is 7.6%?

Select one:

a. $27,514.31

b. $27,697.12

c. $28,218.94

d. $27,578.96

e. $28,257.18

What is the reason for adding a bond sinking fund feature to a bond issue?

Select one:

a. To ensure that investors who buy zero-coupon bonds receive the interest that is due to them

b. To reduce default risk by retiring all or part of an issue prior to maturity

c. To ensure that bondholders receive their periodic interest payments

d. To reduce the interest expense for the issuing company over the life of the issue

e. To protect companies from fraudulent actions by their bondholders