A Zero-Coupon Bond Has a Yield to Maturity of 11

question 96

Multiple Choice

A zero-coupon bond has a yield to maturity of 11% and a par value of $1,000. If the bond matures in 27 years, the bond should sell for a price of _______ today.

• A) $59.74
• B) $501.87
• C) $513.16
• D) $483.49

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Definitions:

Ethane

A hydrocarbon with the formula C2H6, consisting of two carbon atoms single-bonded together, with three hydrogen atoms bonded to each carbon.

Chain Termination

A process in polymerization or DNA synthesis where growth of the polymer chain is stopped by a terminating molecule.

Ethane

A simple aliphatic hydrocarbon with the formula C2H6, consisting of two carbon atoms single-bonded together and six hydrogen atoms.

UV Light

Ultraviolet light, a type of electromagnetic radiation with a wavelength shorter than visible light but longer than X-rays.