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A zero coupon has a face value of $1000 and matures in 4 years. Investors require...

A zero coupon has a face value of $1000 and matures in 4 years. Investors require a 6.8% annual return on these bonds. What should be the selling price of the bond

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Expert Solution

The selling price of the bond can be calculated as the present value of the bond

PV of bond = Face value / (1 + Rate)^N

= 1000 / (1 + 6.80%)^4

= 768.63

jeff jeffy answered 3 years ago
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