The Following Is a List of Prices for Zero-Coupon Bonds

question 39

Multiple Choice

The following is a list of prices for zero-coupon bonds with different maturities and par value of $1,000. You have purchased a 4-year maturity bond with a 9% coupon rate paid annually.The bond has a par value of $1,000.What would the price of the bond be one year from now if the implied forward rates stay the same

• A)$995.63
• B)$1,108.88
• C)$1,000.00
• D)$1,042.78

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Definitions:

Ending Inventories

The total value of all unsold goods that a company has in stock at the end of an accounting period.

Direct Labor Budget

A financial plan that estimates the cost of direct labor needed to meet production goals, part of the overall budgeting process.

Direct Labor-Hour

A measure of the labor time directly involved in the manufacturing process or service delivery, often used in costing and budgeting.

Budgeted Production

The planned level of output a company aims to achieve in a specific period, used for preparing budgets and setting production goals.