Answer:
The correct answer is $10,000, 4% and 4th year.
Explanation:
According to the scenario, the given data are as follows:
Initial purchase = $10,000
At the end of 1st, 2nd and 3rd year = $400
At the end of 4th year = $10,400
(1). The principal amount of this bond is $10,000.
As Initial purchase of bond = Principal amount of bond.
(2). The coupon rate is 4%.
As, at the end of 4th year it pays = $10,400
Here, Principal amount = $10,000 and coupon value = $400
So, Coupon rate = $400 ÷ $10,000 = 4%
(3). The term of this bond is 4 years.
As the principal amount is repaid fully at the end of 4th year.
