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MGEA06H3 (55)
Iris Au (36)
Final

# From 2006 Past Final Exam

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Department
Economics for Management Studies
Course
MGEA06H3
Professor
Iris Au
Semester
Winter

Description
From 2006 Past Exam 29. A bond which matures in three years has a face value of \$1000, and a coupon interest rate (printed on the bond) of 7% (this means that the bond will pay \$70 in one year, another \$70 in two years, and in three years will pay another \$70 and return the face value of \$1000). If the current interest rate in the economy is 5%, then you would expect this bond to sell today for (to the nearest penny): A) \$1000 B) \$1060 C) \$1054.46 D) \$1065.54 E) \$940 F) \$947.51 G) \$932.49 H) \$960 I) \$1040 J) \$1060.40 K) \$1059.60 L) \$1120 M) none of the above 30. A bond which matures in two years has a face value of \$1000, and a coupon interest rate (printed on the bond) of 10% (this means that the bond will pay \$100 in one year, and in two years will pay another \$100 and return the face value of \$100If the bond is currently selling for \$1044.89, what is the current interest rate that makes this bond just worth buying (to the nearest one decimal point)
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