Question
You are interested in one corporate bond that shows the following information: Face Value: $10,000 Interest Rate: 10% (per year) Maturity: 4 years from today
You are interested in one corporate bond that shows the following information:
Face Value: $10,000
Interest Rate: 10% (per year)
Maturity: 4 years from today
Price Index: 120
If you decided to buy this bond, what is the market price you should pay for it? If necessary, round your answer to the nearest dollar.
If you decided to buy this bond at the current market price, what is the amount of annual interest you will receive?
If you decided to buy this bond at the current market price, what is the rate (%) of return on your investment (ROI)? If necessary, round your answer to the first decimal point in %.
Which of the following statement is wrong to explain the Price Index (120) of this bond?
a. The issuing company of this bond must be considered strong and safe financially to pay their dues on this bond.
b. This bond must be popular in the financial market demanded by many investors.
c. Investors in the financial market must consider this bond a risky opportunity.
d. Investing into this bond (=purchasing it) will bring you lower return than the original offer.
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