Use the Table for the Question(s)below

question 24

Multiple Choice

Use the table for the question(s) below.
The following table summarizes prices of various default-free zero-coupon bonds (expressed as a percentage of face value) :
-The yield to maturity for the three-year zero-coupon bond is closest to:

• A)5.4%.
• B)5.8%.
• C)5.6%.
• D)6.0%.

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Definitions:

Issued Price

The price at which a new security is offered to the public for the first time.

Market Rate of Return

The average return on investment that is typical for a particular market or industry.

T-bill

Short-term government securities issued at a discount from the face value and maturing at par, used to finance government debt.

Issue Date

The specific date on which a financial instrument is issued or becomes effective.