f12 Use the Zero Coupon Bond information above to answerthis question.You have $9,000 to invest, and you do not need to collecton your investment for 15 years.• Option 1: You can buy a zero coupon bond with a facevalue of $12,000 that matures in 15 years.• Option 2: You can deposit the money into a CDaccount that matures in 15 years with an annualpercentage yield (APR) of 4.515%.Which option should you choose? Enter 1 or 2. Zero Coupon BondA zero coupon bond is a bond that is sold now at adiscount and will pay its face value when it matures. Nointerest payments are made.

Future Value:It is calculated by compounding the present amount with an appropriate interest…

Answered: Use the Zero Coupon Bond information…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 11MC: When a bond sells at a discount, the carrying value ________ after each amortization entry. A....

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On the maturity date of a bond, the bond owner receives: Group of answer choices O. the face value only O. a coupon payment only O. a coupon payment plus the face value O. a coupon payment plus the purchase price O. the purchase price only Don't use chatgpt
A bond that pays a variable coupon payment over time is called a Blank______ bond. Multiple choice question. retractable floating-rate stripped junk
When a bond sells at a discount, the carrying value ________ after each amortization entry. A. increases B. decreases C. stays the same D. cannot be determined
A trasury security in which periodoc coupon interest payments can be seperate from eachother ad from the orinciple payment is called a: A. STRIP B. T-notes C. T-Bonds D. G. O. Bond E. Revenue bond
When a bond sells at a discount, the carrying value ________ after each amortization entry.A. increasesB. decreasesC. stays the sameD. cannot be determined
If a coupon-paying bond is selling at a discount, the bond's yield to maturity will be _______ than the bond's coupon interest rate. less equal more
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Calculating the risk premium on bonds The text presents a formula where (1+1) = (1-p)(1 +i+x) + p(0) where i is the nominal interest rate on a riskless bond x is the risk premium p is the probability of default (bankruptcy) If the probability of bankruptcy is zero, the rate of interest on the risky bond is When the nominal interest rate for a risky borrower is 8% and the nominal policy rate of interest is 3%, the probability of bankruptcy is %. (Round your response to two decimal places.) When the probability of bankruptcy is 6% and the nominal policy rate of interest is 4%, the nominal interest rate for a risky borrower is %. (Round your response to two decimal places.) When the probability of bankruptcy is 11% and the nominal policy rate of interest is 4%, the nominal interest rate for a risky borrower is %. (Round your response to two decimal places.) The formula assumes that payment upon default is zero. In fact, it is often positive. How would you change the formula in this case?…
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A zero-coupon bond refers to a bond which: Answer a. Does not pay any coupon payments because the issuer is in default b. Promises a single future payment c. Pays coupons only once a year d. Pays coupons only if the bond price is above face value

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