How Much Would an Investor Lose the First Year If

question 37

Multiple Choice

How much would an investor lose the first year if she purchased a 30-year zero-coupon bond with a $1,000 par value and a 10% yield to maturity,only to see market interest rates increase to 12% one year later?

• A) $19.93
• B) $20.00
• C) $23.93
• D) $25.66

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Definitions:

First Lungs

Refers to the initial evolutionary development of lungs in the ancestor of terrestrial vertebrates, facilitating air breathing.

Outpouchings

Bulges or protrusions from a hollow structure in the body.

Efficient Respiratory System

A highly effective system in organisms for the exchange of gases—oxygen and carbon dioxide—between an organism and its environment, ensuring adequate oxygenation of tissues for metabolic needs.

Stale Air

Air that has become unfit for breathing due to poor circulation or presence of pollutants, causing discomfort or health issues.