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Over the five-year term of a $100,000, 12% bond paying interest semi-annually, how many total payments do bondholders receive, including the final repayment of face amount?
A10 payments
B5 payments
C11 payments
D12 payments
Answer & Solution
Correct answer: C. 11 payments
1. The number of payments equals twice the number of years plus one.
2. Semi-annual interest payments: \$5 \text{ years} \times 2 = 10.
3. Add the one final repayment of face amount: \$10 + 1 = 11.
4. Option A counts only the interest payments and omits the maturity repayment.
_Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §5.4 "Bonds", p.222_
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