What Should the Purchase Price of a 2-Year Zero-Coupon Bond

question 36

Multiple Choice

What should the purchase price of a 2-year zero-coupon bond be if it is purchased today and has face value of $1,000?

• A)$966.87
• B)$911.37
• C)$950.21
• D)$956.02

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Definitions:

Periodic Inventory System

An accounting method where inventory levels and cost of goods sold are determined at set periods, rather than continuously tracked.

Journal Entry

A record in accounting that represents a transaction with debit and credit amounts recorded in the ledger to maintain financial records.

Retail Business

A type of business that sells products directly to consumers, typically through various distribution channels.

Service Business

An enterprise offering services or intangible items to its clientele instead of material goods.