The Price of a Five-Year,zero-Coupon,default-Free Security with a Face Value

question 52

Multiple Choice

The price of a five-year,zero-coupon,default-free security with a face value of $1000 is closest to:

• A)$754.
• B)$772.
• C)$776.
• D)$791.

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Definitions:

Marketability

The ease with which an asset or security can be sold or bought in the market without affecting its price.

Target Cash Balance

The ideal amount of cash that a business aims to maintain to handle day-to-day operations and contingencies.

Transaction Needs

Describes the demand for money for the purpose of conducting daily transactions, such as purchasing goods and services.

Disbursement Float

The time lag between when a check is written and when it is actually deducted from the payer's account.