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Author Question: A zero coupon bond A) pays no annual interest. B) sells at face value. C) are a ... (Read 42 times)

Alainaaa8

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on: Jul 10, 2018
A zero coupon bond
 
  A)
 
  pays no annual interest.
  B)
 
  sells at face value.
  C)
 
  are a poor choice for retirement funds.
  D)
 
  depreciates in value as it matures.

Question 2

What is the Rule of 72? Why do you think the Rule of 72 came into widespread use? Give an example of where you think the rule could be useful.
 
  What will be an ideal response?


rleezy04

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Reply #1 on: Jul 10, 2018
Answer to Question 1

A

Answer to Question 2

Answer: The Rule of 72 is a quick method for estimating the amount of time necessary to double your money given a rate of return or, conversely the return required to double your money, given a particular time period. The rule developed prior to calculators and computers and served as a useful technique to estimate values for commodities and securities. The student should be able to identify a situation where it would be important to know the time or rate necessary to double the value of an investment.


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