A one-year discount bond with a face value of $1,000 that is currently selling for $900 has an interest rate of A. 5.26%. B. 10%. C. 11.1%. D. 100%.
PV = FV / (1 + r)n
r = [FV / PV]1/n - 1
= [$1,000 / $900] - 1 = 1.111 - 1 = 0.111, or 11.1%
Hence, Option "C" is correct.
A one-year discount bond with a face value of $1,000 that is currently selling for $900...
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