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:

Federal Income Tax

A charge imposed by the federal government of the United States on the yearly income of individuals, corporations, trusts, and various legal bodies.

Social Security Tax

Social security tax is a tax levied by the government to fund social security programs, typically deducted from an employee's paycheck and also matched by employers.

Medicare Tax

A federal tax that funds Medicare, a health care program for individuals who are 65 years and older or meet other specific criteria, deducted from employee wages with an employer match.

Social Security Tax Rate

The rate at which income is taxed to fund the Social Security program, typically shared between employees and employers.