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A 10-Year, $10,000 Bond with a Coupon Rate of 5

Question 6

Multiple Choice

A 10-year, $10,000 bond with a coupon rate of 5% is a promise by the issuer of the bond to


A) make a single payment to the bondholder of $10,500 in 10 years.
B) pay the bondholder $500 every year for the first nine years and also a $10,000 payment in 10 years.
C) make a payment to the bondholder of $500 in the first year and $10,000 in 10 years.
D) pay the bondholder $500 every year for 10 years and also a $10,000 payment in 10 years.

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