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What Is the Minimum Number of Years in Which an Investment

question 36

Multiple Choice

What is the minimum number of years in which an investment costing $210,000 must return $65,000 per year at a discount rate of 13% in order to be an acceptable investment?

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Definitions:

Term Structure

A representation of how the yield of fixed-income securities varies with different terms or maturity periods.

Yield To Maturity

Yield to maturity is the total return anticipated on a bond if the bond is held until the end of its lifetime.

Coupon Rate

The interest rate stated on a bond or other fixed-income security, representing the annual interest payment divided by the bond's face value.

Market Price

The real-time price for buying or selling an asset or service.

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