Suppose Alex Purchases a 10-Year,zero-Coupon Bond with a Yield to Maturity

question 45

Multiple Choice

Suppose Alex purchases a 10-year,zero-coupon bond with a yield to maturity of 7.5% and face value of $10,000.If he sold it 3 years later,what would be the rate of return of his investment,given that the yield to maturity is now 6%?

• A)7.72%
• B)6%
• C)1.5%
• D)11.08%
• E)13.5%

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Definitions:

Dementia

A category of brain diseases that cause long term and often gradual decrease in the ability to think and remember, affecting daily functioning.

Cognitive Impairment

Difficulty with cognitive functions such as thinking, remembering, and reasoning to a degree that impacts daily life.

Finances

The management, creation, and study of money, banking, credit, investments, assets, and liabilities.

Cerebrovascular Disease

Disease that occurs when the blood supply to the brain is blocked, causing tissue damage to the brain.