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:

Suppliers

Businesses or individuals that provide goods or services to another entity under agreed-upon terms.

Financing Activities

Transactions that involve raising capital (e.g., issuing stock or bonds) and repaying investors (e.g., dividends, loan repayments).

Short-Term Borrowings

Loans and other forms of financial indebtedness that are due for repayment within one year or less.

Operating Expenses

All necessary expenses involved in running a business, excluding the cost of goods sold, such as rent, utilities, and payroll.