The Above Table Shows the Price Per $100-Face Value Bond

question 91

Multiple Choice

The above table shows the price per $100-face value bond of several risk-free, zero-coupon bonds. What is the yield to maturity of the two year, zero-coupon, risk-free bond shown?

• A) 1.43%
• B) 5.71%
• C) 0.05%
• D) 2.85%

---

Definitions:

Expected Returns

The anticipated return on an investment, representing the mean of the probability distribution of the possible returns.

Reward to Risk Ratio

A metric used to compare the expected returns of an investment to the amount of risk undertaken to capture these returns.

Total Risk

The overall risk associated with an investment, including both systematic and unsystematic risks.

Market Risk

The potential for a loss faced by an investor, which is attributed to elements that influence the total performance of the financial markets.