How Much Would an Investor Lose the First Year If

question 37

Multiple Choice

How much would an investor lose the first year if she purchased a 30-year zero-coupon bond with a $1,000 par value and a 10% yield to maturity,only to see market interest rates increase to 12% one year later?

• A) $19.93
• B) $20.00
• C) $23.93
• D) $25.66

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Definitions:

Sale of Goods

A transaction between two parties where the seller transfers ownership of tangible personal property to a buyer for monetary compensation.

Assignee

An individual or entity to whom rights or interests have been transferred through a legal assignment.

Right to Buy

A legal entitlement or option allowing a person to purchase property or stock under specific conditions.

English Rule

A legal principle stating that the losing party in a lawsuit must pay the legal costs of the winning party.