A Zero Coupon Bond with a Face Value of £1,000

question 60

Multiple Choice

A zero coupon bond with a face value of £1,000 is issued with an initial price of £463.34.The bond matures in 25 years.What is the implicit interest, in pounds, for the first year of the bond's life?

• A)£9.08
• B)£12.56
• C)£14.48
• D)£21.47
• E)£31.25

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Definitions:

Radioisotope

Isotope with an unstable nucleus.

Radiometric Dating

A technique used to date materials such as rocks or carbon, by measuring the decay rate of radioactive isotopes contained within those materials.

K-Pg Boundary

A geological signature marking the transition between the Cretaceous (K) and Paleogene (Pg) periods, approximately 66 million years ago, associated with the mass extinction event that included the demise of the dinosaurs.

Cretaceous Period

A geological period from about 145 to 66 million years ago, known for being the last portion of the age of dinosaurs.