Consider a Zero-Coupon Bond with a $1000 Face Value and 10

question 6

Multiple Choice

Consider a zero-coupon bond with a $1000 face value and 10 years left until maturity.If the YTM of this bond is 10.4%,then the price of this bond is closest to:

• A)$1000.
• B)$602.
• C)$1040.
• D)$372.

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Definitions:

Real Accounts

Accounts that represent assets, liabilities, and equity of a business and carry their balances permanently across accounting periods.

Accounting Period

The time span during which financial activities are recorded and reported, commonly a fiscal year or quarter.

Expense Accounts

Accounting categories used to track money spent or costs incurred in a company’s operations.