The financial pages of the local newspaper helped Mary in identifying that she can buy a bond ($1,000 par) for $800. If the coupon rate is 10 percent, the annual interest payments equal $80.

Question

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The annual interest payments would be $100 because the coupon rate (10 percent) is applied to the par value of the bond ($1,000), not the purchase price ($800).

The Financial Pages of the Local Newspaper Helped Mary in Identifying