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You find a zero coupon bond with a par value of $10,000 and 23 years to maturity. The yield to maturity on this bond is 4.5 percent. Assume semiannual compounding periods. What is the price of the bond?

Question

You find a zero coupon bond with a par value of $10,000 and 23 years to maturity. The yield to maturity on this bond is 4.5 percent. Assume semiannual compounding periods.

 

What is the price of the bond? 

check_circleAnswer
Step 1

Calculation of Price of Bond:

The price of bond is $3,593.25.

Excel Spreadsheet:

...
В
1 Face Value
2 Coupon Rate
3 Coupon Payment
4 Yield to Maturity
5 Number of Periods
Price of BondS3,593.25
s10,000
0.00%
$0.00
2.25%
46
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В 1 Face Value 2 Coupon Rate 3 Coupon Payment 4 Yield to Maturity 5 Number of Periods Price of BondS3,593.25 s10,000 0.00% $0.00 2.25% 46

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