Question: Assuming simple annual compounding, how much should you pay for a one-year bond with a stated interest rate of 5 percent and a face value

Assuming simple annual compounding, how much should you pay for a one-year bond with a stated interest rate of 5 percent and a face value of $1,000 if you want to earn a return of 5 percent? What is the maximum you would be willing to pay if you want to earn a return of 8 percent? What is the maximum you would be willing to pay if you require a return of 4 percent?

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