Your investment banking firm has estimated what your new issue of bonds is likely to sell for under several different economic conditions.What is the expected (average)selling price of each bond?
A)$1,000.00
B)$1,007.50
C)$1,040.00
D)$1,100.33

Question

Your investment banking firm has estimated what your new issue of bonds is likely to sell for under several different economic conditions.What is the expected (average)selling price of each bond? 
A)$1,000.00 
B)$1,007.50 
C)$1,040.00 
D)$1,100.33

Quizplus · Accepted Answer

The question does not provide us with the specific economic conditions, but it does tell us that the investment banking firm has estimated what the new issue of bonds is likely to sell for under several different economic conditions. Therefore, the expected selling price should be an average of those estimates. Choice B, $1,007.50, is the only answer that falls in the range between $1,000.00 (the face value of the bond) and $1,040.00 and is therefore the most reasonable choice.

Your Investment Banking Firm Has Estimated What Your New Issue