You Purchased a Zero-Coupon Bond Last Week for $499

question 27

Multiple Choice

You purchased a zero-coupon bond last week for $499. The bond promised to pay $1,000 in ten years. Since your purchase, prevailing interest rates have increased by 50 basis points. If
You assume no other changes have occurred that would affect your bond's price, which of the
Following statements is necessarily true?

• A)The value of your investment has decreased to about $476.
• B)The value of your investment has decreased to about $449.
• C)The value of your investment has increased to about $549.
• D)The value of your investment has stayed the same since this is a zero-coupon bond.

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Definitions:

Essential Daily Ingredients

Fundamental elements or components necessary for maintaining daily health and well-being.

Echolalia

The automatic repetition of vocalizations made by another person, often a symptom of autism or certain other neurological disorders.

Pronoun Reversal

The incorrect use of pronouns, often observed in early language development or certain language disorders, where an individual might refer to themselves as "you" and others as "I."