Consider a Zero Coupon Bond with 20 Years to Maturity

question 64

Multiple Choice

Consider a zero coupon bond with 20 years to maturity.The amount that the price of the bond will change if its yield to maturity decreases from 7% to 5% is closest to:

• A)$120
• B)-$53
• C)$53
• D)$673

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Definitions:

Goodwill

An intangible asset that arises when a buyer acquires an existing business, representing the value of the business's reputation, brand, and ongoing relations.

Comparative Advantage

The capacity of an entity to generate a product or service with a smaller opportunity cost compared to others.

Free-Trade Policies

Economic policies that allow imports and exports to occur without restrictive tariffs, quotas, or other barriers to trade.

Protection

The practice of shielding a sector of the economy from foreign competition.