Calculate the price of a zero-coupon bond that matures in 13 years if the market interest...

Calculate the price of a zero-coupon bond that matures in 13 years if the market interest rate is 6.15 percent. Assume semiannual compounding. (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Treasury note
Corporate bond
Municipal bond

Solutions

Expert Solution

Price of zero coupon bond = Face value / (1+ Rate)^N

Face value = 1000

Rate = 6.15%/2 = 3.075% per semi annual period

N = 13 * 2 = 26 semi annual periods

Price = 1000/1.03075^26

= 455.00

jeff jeffy answered 2 years ago

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