The Yields to Maturity on a Number of One-Year,zero-Coupon Securities

question 66

Multiple Choice

The yields to maturity on a number of one-year,zero-coupon securities are shown in the table above.What is the price (expressed as a percentage of the face value) of a one-year,zero-coupon corporate bond with a B rating?

• A) 94.33%
• B) 95.06%
• C) 95.88%
• D) 96.06%
• E) 100%

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Definitions:

Customs Union

An agreement between two or more countries to remove trade barriers and reduce tariffs among them, and to establish a common external tariff against other countries.

Common External Tariff

A uniform tariff rate adopted by a customs union or common market on imports from countries outside the union.

Free Trade Area

A region where member countries have agreed to reduce or eliminate trade barriers, such as tariffs and quotas, among themselves.

Dumping

The practice wherein an exporter sells products in a foreign state for less than the price charged for the same or comparable goods in the exporter’s home market.