8. Given the scenario that a treasury bond will be paying a lump sum of $1,000 exactly 3 years from period 0. The paper rate is 6%, semiannual compounding. It will have: a periodic interest rate is greater than 3%.a periodic rate is less than 3%.a present value would be greater if the lump sum were discounted back for more periods.a PV of the $1,000 lump sum has a smaller present value than the PV of a 3-year, $333.33 ordinary annuity.a present value of the $1,000 would be the same if interest were compounded monthly rather than semiannually.Group of answer choices34521Cannot be determined

Face Value = $1,000 Time Period = 3 Years Interest Rate = 6% compounded semiannual

Answered: Given the scenario that a treasury bond…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 11P

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Given the scenario that a treasury bond will be paying a lump sum of $1,000 exactly 3 years from period 0. The paper rate is 6%, semiannual compounding. It will have:

a periodic interest rate is greater than 3%.
a periodic rate is less than 3%.
a present value would be greater if the lump sum were discounted back for more periods.
a PV of the $1,000 lump sum has a smaller present value than the PV of a 3-year, $333.33 ordinary annuity.
a present value of the $1,000 would be the same if interest were compounded monthly rather than semiannually.

Group of answer choices

Cannot be determined

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