Use the Table for the Question(s)below

question 63

Multiple Choice

Use the table for the question(s) below.
Consider the following zero-coupon yields on default-free securities:
-The price today of a 3-year default-free security with a face value of $1000 and an annual coupon rate of 6% is closest to:

• A)$1000.
• B)$1021.
• C)$1013.
• D)$1005.

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Definitions:

Financial Liability

An obligation to deliver cash or another financial asset to another entity, or to exchange financial instruments under potentially unfavorable conditions.

Offset Conditions

Conditions that allow entities to negate or counterbalance one position with another, commonly used in accounting and finance to manage risk or net-off liabilities against assets.

Different Financial Instruments

Various types of investment assets, including stocks, bonds, derivatives, and mutual funds, that provide a way for individuals and businesses to invest, finance operations, or manage risk.

Financial Instrument

A contract that leads to the creation of a financial asset for one party and results in a financial liability or equity instrument for another party.