Zero-Coupon Bonds Issued in 2006 Are Due in 2016

question 99

Multiple Choice

Zero-coupon bonds issued in 2006 are due in 2016. If they were originally sold at 55 percent of face value, the implied yield to maturity at issuance is

• A)1.062%.
• B)6.16%.
• C)8.31%.
• D)cannot be determined, need more information.

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Definitions:

Imaginary Audience

Type of thought common to adolescents in which young people believe that other people are just as concerned about the adolescent’s thoughts and characteristics as they themselves are.

Personal Fable

Type of thought common to adolescents in which young people believe themselves to be unique and protected from harm.

Imaginary Audience

A social psychological concept where an individual imagines and believes that multitudes of people are enthusiastically listening or watching them.

Imaginary Audience

A belief common in adolescence that one is constantly being observed and evaluated by others.