The Following Is a List of Prices for Zero-Coupon Bonds

question 22

Multiple Choice

The following is a list of prices for zero-coupon bonds with different maturities and par values of $1,000. What is the yield to maturity on a 3-year zero-coupon bond?

• A)6.37%
• B)9.00%
• C)7.33%
• D)8.24%

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Definitions:

Lawsuit Loss

Financial damages that a company is required to pay as the result of legal judgment or settlement of a lawsuit.

Probable Loss

An estimated loss from a contingent liability that is likely to occur and can be reasonably estimated.

Fair Value Option

An accounting approach allowing companies to choose to measure certain financial assets and liabilities at fair market prices.

Reporting Requirements

These refer to the specific guidelines or regulations that entities must follow when preparing and presenting their financial and operational information to regulatory bodies or the public.