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Zero Coupon Bond Price Calculate the price of a zero coupon bond that matures in 9...

Zero Coupon Bond Price Calculate the price of a zero coupon bond that matures in 9 years if the market interest rate is 8 percent. Assume semi-annual interest payments and $1,000 par value. (Round your answer to 2 decimal places.)

Multiple Choice

  • $920.00

  • $500.25

  • $493.63

  • $1,000.00

Solutions

Expert Solution

Price of bond=Par value/(1+market interest rate/2)^(2*time period)

=1000/(1+0.08/2)^(2*9)

=1000*0.493628121

=$493.63(Approx).

jeff jeffy answered 2 years ago
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