Consider a Zero-Coupon Bond with a $1 000 Face Value

question 22

Multiple Choice

Consider a zero-coupon bond with a $1 000 face value and 10 years left until maturity. If the bond is currently trading for $459, then the yield to maturity on this bond is closest to:

• A)8.1%
• B)7.5%
• C)9.7%
• D)10.4%

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Definitions:

Diaphoresis

Excessive sweating, often as a result of illness or stress.

Etiology

The study of the causes or origins of diseases and disorders.

Axillary

Pertaining to the armpit area.

Centigrade

A scale of temperature in which water freezes at 0 degrees and boils at 100 degrees under standard conditions.