Consider a Zero-Coupon Bond with a $1000 Face Value and 10

question 6

Multiple Choice

Consider a zero-coupon bond with a $1000 face value and 10 years left until maturity.If the YTM of this bond is 10.4%,then the price of this bond is closest to:

• A)$1000.
• B)$602.
• C)$1040.
• D)$372.

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Definitions:

Market Price

Refers to the current price at which an asset or service can be bought or sold in a open and competitive market.

Stock Drops

A decline in the market price of a company's shares.

Ex-Dividend Date

The exact day when a stock is bought or sold without eligibility for the upcoming dividend distribution.

Receive the Dividend

The process where shareholders are paid a portion of the company's earnings, typically in cash or additional shares.