YIELD CURVE FOR ZERO COUPON BONDS RATED AA

question 17

Multiple Choice

YIELD CURVE FOR ZERO COUPON BONDS RATED AA

Assume that there are no liquidity premiums.
You just bought a 15-year maturity Xerox corporate bond rated AA with a 0 percent coupon. You expect to sell the bond in eight years. Find the expected interest rate at the time of sale (watch out for rounding error) .

• A)13.92 percent
• B)11.00 percent
• C)8.85 percent
• D)12.49 percent
• E)12.80 percent

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Definitions:

Second Great Awakening

A Protestant religious revival during the early 19th century in the United States, emphasizing personal salvation, emotional response, and individual faith.

Christian Blacks

African American individuals who practice Christianity, bringing unique cultural and historical perspectives to their faith and church communities.

White Slaveholders

Individuals of European descent who owned and exploited enslaved African people for labor and profit in historical contexts, primarily in the Americas.

David Walker

An African American abolitionist, writer, and anti-slavery activist in the 19th century known for his 1829 pamphlet, "Walker's Appeal," which called for black unity and self-help in the fight against oppression and injustice.