A Risk-Free, Zero-Coupon Bond with a Face Value of $1000

question 11

Multiple Choice

A risk-free, zero-coupon bond with a face value of $1000 has 15 years to maturity. If the YTM is 5.8%, which of the following would be closest to the price this bond will trade at?

• A) $686
• B) $429
• C) $721
• D) $525

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Definitions:

Registration

The act of recording information, such as ownership of property or a vehicle, in an official public registry or database.

Security Interest

A legal right or claim on assets granted to creditors to secure loan repayments, typically collateralized by the asset itself.

Perfected

Refers to the completion of all necessary legal steps or procedures to enforce rights, often used in the context of securing interests in collateral under law.

Possession

The act of having physical control over property or goods, with or without the right to own them.