Question
In: Finance
A bond has a face value of $20,000 and a maturity of 20 years. It makes...
A
bond has a face value of $20,000 and a maturity of 20 years. It
makes no coupon payments over the life of the bond. The required
return on this bond is 5.4% compounded semiannually.
Solutions
Expert Solution
Bond value of Zero-coupon bond = Face value / (1+ Yield per period)^Number of periods
= 20000 / (1+5.4%/2)^(20*2)
= 20000 / (1.027)^40
= 20000 / 2.90280420742
Bond value = $6889.89
jeff jeffy answered 2 years agoRelated Solutions
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