Shoffner buys a bond in the amount of $1,000 with a promised interest rate of 18 percent.If the market interest rate decreases to 3 percent,Shoffner can sell his bond for up to

Question

Quizplus · Accepted Answer

When interest rates in the market decrease, bond prices increase. In this case, the bond purchased by Shoffner has a high promised interest rate of 18 percent, which is much higher than the current market interest rate of 3 percent. This means that the bond is valuable and in demand, and Shoffner can sell it in the market for a price higher than its face value of $1,000. The exact amount will depend on the market conditions, but choice B of $6,000 is the most likely scenario, as it represents a significant increase in value. Therefore, the best choice for Shoffner would be to sell the bond for as much as possible in the market.

Shoffner Buys a Bond in the Amount of $1,000 with a Promised