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If He Feels the Chances of Low, Moderate, and High

question 92

Multiple Choice

If he feels the chances of low, moderate, and high demand are 30%, 30%, and 40% respectively, what is the expected annual profit for the bus that he will decide to purchase?


Definitions:

Zero Coupon Bond

A debt security that does not pay periodic interest (coupon) payments and is instead issued at a substantial discount to its face value, with the return being the difference between the purchase price and the face value at maturity.

Current Yield

The current yield is a financial metric that calculates the annual income (interest or dividends) an investment generates, divided by its current price.

Yield to Maturity

The complete yield expected from a bond assuming it is retained until it matures.

Yield to Call

The rate of return anticipated on a bond if it is held until the call date, which is before the bond's maturity, including all interest payments and the call price.

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