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Builtrite sold 15 year,\$1000 par value, zero coupon bonds for \$481 what was their yield

Builtrite sold 15 year,\$1000 par value, zero coupon bonds for \$481 what was their yield

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Expert Solution

Par Value of Bond $                 1,000
Maturity period in years                           15
Current Sales Price $                     481
Discount Factor =481/1000=                     0.481
From PV table we get that the PV factor @5% for 15 years
is =0.481
So the Yield of the Zero Coupon Bond is 5%

jeff jeffy answered 2 years ago
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