Consider the Following Yields to Maturity on Various One-Year, Zero-Coupon

question 62

Multiple Choice

Consider the following yields to maturity on various one-year, zero-coupon securities: The price (expressed as a percentage of the face value) of a one-year, zero-coupon corporate bond with a BBB rating is closest to ________.

• A) 112.68
• B) 131.46
• C) 75.12
• D) 93.90

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Definitions:

Average Cost Method

An inventory costing method used to determine the cost of goods sold and ending inventory by averaging the costs of all items available for sale.

Schedule D Transactions

Refers to a tax form used in the U.S. to report capital gains and losses from the sale, exchange, or disposition of capital assets.

MACRS

Modified Accelerated Cost Recovery System, a method of depreciation in the U.S. for tax purposes, allowing faster recovery of investments in certain property through depreciation deductions.

Depreciable Real Property

Real estate eligible for depreciation for tax purposes, meaning its cost can be deducted over a period of time.