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A U.S. Treasury bond will pay a lump sum of $1,000 exactly 3 years from today. The nominal interest rate is 6%, semiannual compounding .

A U.S. Treasury bond will pay a lump sum of $1,000 exactly 3 years from today. The nominal interest rate is 6%, semiannual compounding. Which of the following statements is CORRECT?

Question 6 options:

a)

The present value of the $1,000 would be larger if interest were compounded monthly rather than semiannually.

b)

The present value would be greater if the lump sum were discounted back for more periods.

c)

The PV of the $1,000 lump sum would have a larger present value if the interest were compounded annually rather than semiannually.

d)

The periodic interest rate is less than 3%.

e)

The periodic interest rate is greater than 3%.

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