Question

You are purchasing a 30-year, zero coupon bond. The yield to maturity is 9.1% and the face value is $1,000. What is the current market price

Answer 1

Zero-cupon bond= $73.33

Step-by-step explanation:

Giving the following information:

You are purchasing a 30-year, zero coupon bond. The yield to maturity is 9.1% and the face value is $1,000.

To calculate the price of the bond, we need to use the following formula:

Zero-cupon bond= [face value/(1+i)^n]

Zero-cupon bond= [1,000 / (1.091^30)]

Zero-cupon bond= $73.33