You Purchase a 30-Year,zero-Coupon Bond for a Price of $20

question 32

Multiple Choice

You purchase a 30-year,zero-coupon bond for a price of $20.The bond will pay back $100 after 30 years and make no interim payments.The annual compounded return (geometric average return) on this investment is:

• A)5.31%
• B)6.54%
• C)4.78%
• D)5.51%

---

Definitions:

Downward-Sloping

Describes a line or curve on a graph that descends from left to right, indicating a negative relationship between two variables.

Purely Competitive

A market scenario where all participants sell indistinguishable goods, ensuring no one seller can influence prices, creating an ideal competition.

Market Supply Curve

A graphical representation showing the relationship between the price of a good and the total output of the good all producers are willing to supply.

Remaining Firms

Businesses that continue to operate in a market after others have exited, often due to competitive advantages or niches.