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

question 3

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 eight 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 the options

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Definitions:

Piggyback

refers to using or building upon an existing idea, platform, or system for new purposes or benefits.

Unstructured

Lacking a specific or predetermined format or organization, often allowing for more flexibility and creativity in approach.

Structured

describes something that is organized and arranged in a systematic or planned way.

Prescriptive

Relating to the imposition or enforcement of a rule or method; often involves providing explicit directions or standards.