Use the Table for the Question(s)below

question 34

Multiple Choice

Use the table for the question(s) below.
The following table summarizes prices of various default-free zero-coupon bonds (expressed as a percentage of face value) :

-The yield to maturity for the three-year zero-coupon bond is closest to:

• A)5.4%
• B)5.8%
• C)5.6%
• D)6.0%
• E)5.0%

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Definitions:

Commodity Prices

The market prices for raw materials or primary agricultural products that are traded on exchanges.

Exchange Rates

The value of one currency for the purpose of conversion to another, determining how much one currency is worth in terms of another.

Interest Rates

The cost of borrowing money or the return earned on an investment, usually expressed as a percentage.

Inflation

The rate at which the general level of prices for goods and services is rising, and, consequently, purchasing power is falling.