You find a zero coupon bond with a par value of $10,000 and 19 years to maturity. The yield to maturity on this bond is 4.7 perc

Question

2 years ago

10

ent. Assume semiannual compounding periods. What is the price of the bond

1 answer:

Nikitich [7] · Answer 1 · 2022-04-15T12:10:13+03:00

Answer:

$4,136.77

Explanation:

In this question, we use the present value formula which is shown in the attachment below:

Given that,

Future value = $10,000

Rate of interest = 4.7% ÷ 2 = 2.35

NPER = 19 years × 2 = 38 years

PMT = $0

The formula is shown below:

= -PV(Rate;NPER;PMT;FV;type)

After solving this, the price of the bond is $4,136.77