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Suppose a One- Year Discount Bond Offers to Pay $1250

Question 16

Multiple Choice

Suppose a one- year discount bond offers to pay $1250 in one year and currently sells for $1150. Given this information, we know that the interest rate on the bond is:


A) 12.7%.
B) 8.7%.
C) 9.7%.
D) 15.7%.
E) 6.7%.

Correct Answer:

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