Please help with final exam
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Please help with final exam
![### Financial Education: Understanding Interest Rates and Bonds
#### 38) Identifying the Interest Rate
An interest rate is quoted at 10%, compounded semi-annually (every six months). You have $110.25 at the end of the period for an interest rate of 10.25%. What is the 10.25% interest rate called?
- a) Stated interest rate.
- b) Annual Percentage Rate (APR)
- c) Effective Annual Rate
- d) An Interest only loan
- e) Simple interest
#### Example for Questions 39-41
Bank of America wants to issue a $1,000,000 bond. The rate on debt issued by the comparable company Citigroup is 12%. Thus, Bank of America will pay 12% per year in interest on monies borrowed for 30 years. Bank of America repays the principal at the end of year 30.
#### 39) Determining Bank of America's Coupon Payment
What is Bank of America's coupon payment?
- a) $1,000,000
- b) 12%
- c) 30 years
- d) $120,000
- e) Not able to calculate
#### 40) Understanding the Par Value of Bank of America's Bond
What is the par value of Bank of America's bond?
- a) $1,000,000
- b) 12%
- c) 30 years
- d) $120,000
- e) Not able to calculate
This section aims to help users understand different types of interest rates and how to calculate payments and values related to bonds.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc0c85ab8-b1cf-40a5-a93b-8f102a3fc8f5%2F6e54fa27-ae84-4369-b544-3725a7ba7a4f%2Fpvruvvn_processed.jpeg&w=3840&q=75)
Transcribed Image Text:### Financial Education: Understanding Interest Rates and Bonds
#### 38) Identifying the Interest Rate
An interest rate is quoted at 10%, compounded semi-annually (every six months). You have $110.25 at the end of the period for an interest rate of 10.25%. What is the 10.25% interest rate called?
- a) Stated interest rate.
- b) Annual Percentage Rate (APR)
- c) Effective Annual Rate
- d) An Interest only loan
- e) Simple interest
#### Example for Questions 39-41
Bank of America wants to issue a $1,000,000 bond. The rate on debt issued by the comparable company Citigroup is 12%. Thus, Bank of America will pay 12% per year in interest on monies borrowed for 30 years. Bank of America repays the principal at the end of year 30.
#### 39) Determining Bank of America's Coupon Payment
What is Bank of America's coupon payment?
- a) $1,000,000
- b) 12%
- c) 30 years
- d) $120,000
- e) Not able to calculate
#### 40) Understanding the Par Value of Bank of America's Bond
What is the par value of Bank of America's bond?
- a) $1,000,000
- b) 12%
- c) 30 years
- d) $120,000
- e) Not able to calculate
This section aims to help users understand different types of interest rates and how to calculate payments and values related to bonds.
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