A Zero-Coupon Bond Has a Yield to Maturity of 9

question 48

Multiple Choice

A zero-coupon bond has a yield to maturity of 9% and a par value of $1,000.If the bond matures in 8 years,the bond should sell for a price of _______ today.

• A) $422.41
• B) $501.87
• C) $513.16
• D) $483.49
• E) none of these

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Definitions:

Overhead Cost

Expenses related to the operation of a business that are not directly tied to a specific product or service, including rent, utilities, and administrative salaries.

Contribution Margin

The amount remaining from sales revenue after variable costs are deducted, indicating how much contributes to covering fixed costs and generating profit.

Wholesale Distributor

A business that buys goods in large quantities from manufacturers and resells them in smaller quantities to retailers or other businesses.

Educational CD-ROMs

Digital storage media used to store and access educational content and interactive learning programs.