The Yield to Maturity of a One-Year,simple Loan of $500

question 16

Multiple Choice

The yield to maturity of a one-year,simple loan of $500 that requires an interest payment of $40 is

• A) 5 percent.
• B) 8 percent.
• C) 12 percent.
• D) 12.5 percent.

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Definitions:

Mutually Exclusive

Two events that cannot occur at the same time, meaning the occurrence of one event prevents the occurrence of the other.

P(B / A)

The probability of event B occurring given that event A has already occurred, often used in conditional probability and Bayesian statistics.

Union

In mathematics, especially in set theory, the union of a collection of sets is the set that contains all elements that are a member of any set within the collection.

Random Events

Outcomes or occurrences that cannot be predicted with certainty due to the random nature of the underlying process.