S. Treasury bond will pay a lump sum of $1,000 exactly 3 years from today. The nominal interest rate is 6%, semiannual compounding. Which of the following statements is CORRECT?
A) The periodic interest rate is greater than 3%.
B) The periodic rate is less than 3%.
C) The present value would be greater if the lump sum were discounted back for more periods.
D) The present value of the $1,000 would be smaller if interest were compounded monthly rather than semiannually.
E) The PV of the $1,000 lump sum has a higher present value than the PV of a 3-year, $333.33 ordinary annuity.

Question

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The Answer of S. Treasury bond will pay a lump sum of $1,000 exactly 3 years from today. The nominal interest rate is 6%, semiannual compounding. Which of the following statements is CORRECT?
A) The periodic interest rate is greater than 3%.
B) The periodic rate is less than 3%.
C) The present value would be greater if the lump sum were discounted back for more periods.
D) The present value of the $1,000 would be smaller if interest were compounded monthly rather than semiannually.
E) The PV of the $1,000 lump sum has a higher present value than the PV of a 3-year, $333.33 ordinary annuity.

S Treasury Bond Will Pay a Lump Sum of $1,000