Question
In: Finance
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 agoRelated Solutions
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