A Two-Year Zero-Coupon Treasury Bond with a Maturity Value of $1,000

question 99

Multiple Choice

A two-year zero-coupon Treasury bond with a maturity value of $1,000 has a price of $873.4387.A one-year zero-coupon Treasury bond with a maturity value of $1,000 has a price of $938.9671.If the pure expectations theory is correct,for what price should one-year zero-coupon Treasury bonds sell one year from now?

• A) $798.89
• B) $824.66
• C) $852.28
• D) $930.23
• E) $989.11

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Definitions:

Sales Dollars

The total revenue generated from the sale of goods and services within a specific period.

Common Fixed Expenses

These are fixed costs that are not directly tied to production levels, such as salaries, rent, and insurance, which are shared across different segments of a business.

Break-Even

The point at which total costs and total revenues are equal, meaning that a business or product is neither making a profit nor sustaining a loss.

Sales Dollars

The total revenue generated from the sale of goods or services by a company before any expenses are deducted.