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Please help with final exam

Please help with final exam

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
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.
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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