Part A

A $1,000 par value bond pays interest of $35 each quarter and will mature in 10 years. If an investor's simple annual required rate of return is 12 percent with quarterly compounding, how much should the investor be willing to pay for this bond? (Round the answer to two decimal places.)

$1,115.57

$825.49

$941.36

$1391.00

lesser is the chance that the realized return will differ significantly from the expected return

greater is the chance that the realized return will be negative

greater is the chance that the realized return will differ significantly from the expected return

If the expected rate of return on a stock exceeds the required rate, it means that _____

the dividends are not declared.

the stock is a good buy.

the stock is experiencing a supernormal growth.

The company is not trying to maximize the price per share. The market for a stock is said to be in equilibrium when the _____.

expected return on the stock is equal to its historical return

expected return on the stock is equal to the market risk premium

expected return on the stock is equal to the market return

expected return on the stock is equal to its required return

The principal value generally is written on the outside cover of the debt contract, so it is sometimes called the:

premium value.

maturity value

discounted value.

face value.