Consider the Following $1,000-Par-Value Zero-Coupon Bonds The Yield to Maturity on Bond D Is
A) 10

question 61

Multiple Choice

Consider the following $1,000-par-value zero-coupon bonds: $\begin{array}{ccc}&\text { Years of } \\\text { Bond } & \text { Maturity } & \text { Price } \\\hline\text { A } & 1 & \$ 909.09 \\\text { B } & 2 & 811.62 \\\text { C } & 3 & 711.78 \\\text { D } & 4 & 635.52\end{array}$ The yield to maturity on bond D is

• A) 10%.
• B) 11%.
• C) 12%.
• D) 14%.
• E) None of the options are correct.

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Definitions:

Company Profits

The financial gains made by a company after all expenses, taxes, and costs have been subtracted from total revenue.

Overhead Costs

Expenses associated with running a business that cannot be directly tied to a specific product or service, such as rent, utilities, and management salaries.

Cost Driver

A factor that causes the cost of an activity or a process to change.

Activity Drivers

Factors that influence the cost of business activities by determining the level of effort or resources required.