You Are Considering Investing in a Zero-Coupon Bond That Will

question 23

Multiple Choice

You are considering investing in a zero-coupon bond that will pay you its face value of $1000 in ten years.If the bond is currently selling for $485.20,then the internal rate of return (IRR) for investing in this bond is closest to:

• A)12%
• B)8.0%
• C)7.5%
• D)10%

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Definitions:

Rental Income

Income generated from renting out property or other assets to tenants.

Cash Inflow

Money entering a business from various sources such as operations, financing activities, and investing activities, contributing to the overall cash balance.

Operating Activities

Operating Activities involve the primary activities a company engages in to generate income, including production, sales, and delivery of its product or service.

Investing Activities

Transactions related to buying or selling long-term assets and investments other than cash equivalents.