At What Price Will Gohm Have to Sell a 10-Year

question 68

Multiple Choice

At what price will Gohm have to sell a 10-year zero coupon bond that will yield 8.75% if held to maturity?

• A)$453
• B)$875.00
• C)$87.50
• D)$432

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Definitions:

Semi-Annually

Occurring twice a year; typically refers to payments or adjustments made every six months.

Withdraw

To take money out of an account or to remove oneself from a particular situation.

Compounded Annually

A method of calculating interest where the interest for the year is added to the principal sum, thus interest in the next year is on the increased sum.

Loan Amount

The total sum of money borrowed in a loan, which the borrower agrees to pay back along with interest.