# [Solved] A Consol Paying $20 Annually When the Interest Rate Is

## A consol paying $20 annually when the interest rate is 5 percent has a price of

A)$100.

B)$200.

C)$400.

D)$800.

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- Q45: Which of the following $1,000 face-value securities has the lowest yield to maturity? A)a 5 percent coupon bond selling for $1,000 B)a 10 percent coupon bond selling for $1,000 C)a 15 percent coupon bond selling for $1,000 D)a 15 percent coupon bond selling for $900
- Q46: Which of the following bonds would you prefer to be buying? A)a $10,000 face-value security with a 10 percent coupon selling for $9,000 B)a $10,000 face-value security with a 7 percent coupon selling for $10,000 C)a $10,000 face-value security with a 9 percent coupon selling for $10,000 D)a $10,000 face-value security with a 10 percent coupon selling for $10,000
- Q47: A coupon bond that has no maturity date and no repayment of principal is called a A)consol. B)cabinet. C)Treasury bill. D)Treasury note.
- Q48: The price of a consol equals the coupon payment A)times the interest rate. B)plus the interest rate. C)minus the interest rate. D)divided by the interest rate.
- Q49: The interest rate on a consol equals the A)price times the coupon payment. B)price divided by the coupon payment. C)coupon payment plus the price. D)coupon payment divided by the price.
- Q51: If a perpetuity has a price of $500 and an annual interest payment of $25,the interest rate is A)2.5 percent. B)5 percent. C)7.5 percent. D)10 percent.
- Q52: The yield to maturity for a perpetuity is a useful approximation for the yield to maturity on long-term coupon bonds. It is called the ________ when approximating the yield for a coupon bond. A)current yield B)discount yield C)future yield D)star yield
- Q53: The yield to maturity for a one-year discount bond equals the increase in price over the year,divided by the A)initial price. B)face value. C)interest rate. D)coupon rate.
- Q54: If a $10,000 face-value discount bond maturing in one year is selling for $5,000,then its yield to maturity is A)5 percent. B)10 percent. C)50 percent. D)100 percent.
- Q55: If a $5,000 face-value discount bond maturing in one year is selling for $5,000,then its yield to maturity is A)0 percent. B)5 percent. C)10 percent. D)20 percent.

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