TJ's Offers a $1,000 Face Value,zero Coupon Bond with a Yield

question 2

Multiple Choice

TJ's offers a $1,000 face value,zero coupon bond with a yield to maturity of 11.3 percent,given annual compounding.The bond matures in 16 years.What is the current price?

• A)$178.78
• B)$180.33
• C)$188.36
• D)$190.09
• E)$192.18

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Definitions:

Expected Price Level

The anticipated average price of goods and services in the economy at a future point in time.

Actual Price Level

The current general level of prices for goods and services in an economy, which can affect purchasing power and inflation.

Short-Run Aggregate Supply

The total amount of goods and services that producers in an economy are willing and able to supply at a given overall price level in a short period.

Expected Price Level

The anticipated average cost of goods and services in an economy over a specific time period.