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Use the Zero Coupon Bond information above to answer this question. You have $9,000 to invest, and you do not need to collect on your investment for 15 years. • Option 1: You can buy a zero coupon bond with a face value of $12,000 that matures in 15 years. • Option 2: You can deposit the money into a CD account that matures in 15 years with an annual percentage yield (APR) of 4.515%. Which option should you choose? Enter 1 or 2.

Use the Zero Coupon Bond information above to answer this question. You have $9,000 to invest, and you do not need to collect on your investment for 15 years. • Option 1: You can buy a zero coupon bond with a face value of $12,000 that matures in 15 years. • Option 2: You can deposit the money into a CD account that matures in 15 years with an annual percentage yield (APR) of 4.515%. Which option should you choose? Enter 1 or 2.

Intermediate Financial Management (MindTap Course List)
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter4: Bond Valuation
Section: Chapter Questions
Problem 11MC
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Use the Zero Coupon Bond information above to answer this question. You have $9,000 to invest, and you do not need to collect on your investment for 15 years. • Option 1: You can buy a zero coupon bond with a face value of $12,000 that matures in 15 years. • Option 2: You can deposit the money into a CD account that matures in 15 years with an annual percentage yield (APR) of 4.515%. Which option should you choose? Enter 1 or 2.
Transcribed Image Text:Use the Zero Coupon Bond information above to answer this question. You have $9,000 to invest, and you do not need to collect on your investment for 15 years. • Option 1: You can buy a zero coupon bond with a face value of $12,000 that matures in 15 years. • Option 2: You can deposit the money into a CD account that matures in 15 years with an annual percentage yield (APR) of 4.515%. Which option should you choose? Enter 1 or 2.
Zero Coupon Bond A zero coupon bond is a bond that is sold now at a discount and will pay its face value when it matures. No interest payments are made.
Transcribed Image Text:Zero Coupon Bond A zero coupon bond is a bond that is sold now at a discount and will pay its face value when it matures. No interest payments are made.
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