American_Bankers_Association
CTFA · Question #273
You are considering investing in a zero-coupon bond that sells for $250. At maturity in 16 years it will be redeemed for $1,000. What approximate annual rate of growth does this represent?
The correct answer is B. 9%. See the full explanation below for the reasoning.
Investment Management
Question
You are considering investing in a zero-coupon bond that sells for $250. At maturity in 16 years it will be redeemed for $1,000. What approximate annual rate of growth does this represent?
Options
- A8%
- B9%
- C12%
- D25%
How the community answered
(24 responses)- A8% (2)
- B71% (17)
- C4% (1)
- D17% (4)
Topics
#zero-coupon bond#compound growth rate#present value#bond pricing
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