Use the Following Information to Answer the Question(s)below

question 33

Multiple Choice

Use the following information to answer the question(s) below.
Suppose you purchase a 20-year treasury bond with a 6% annual coupon ten years ago at par.Today the bond's yield to maturity has risen to 8% (EAR) .
-If you sell this bond now,the internal rate of return you will earn on your investment will be closest to:

• A)5.0%.
• B)4.9%.
• C)6.0%.
• D)8.0%.

---

Definitions:

Income Statement

A financial document that provides a summary of a company's revenues, expenses, and profits over a specified period, typically a quarter or year.

Gross Margin

The difference between revenue and the cost of goods sold, indicating the profitability of selling goods.

Direct Expenses

Costs that can be directly attributed to the production of goods or services, such as raw materials and direct labor.

Direct Expense

Costs directly attributable to the production of goods or services, such as materials and labor.