Final answer:
The price of a 15-year, $1,000 face value zero-coupon bond with a 10% yield to maturity is found by discounting the face value using the formula PV = FV / (1 + r)^n. The calculation gives a present value of approximately $239.39, so the closest answer is (d) $239.option d.
Step-by-step explanation:
The question asks what the price of a 15-year, $1,000 face value, zero-coupon bond would be, given a yield to maturity (YTM) of 10%. In finance, the price of a zero-coupon bond can be calculated by discounting the face value to the present using the formula PV = FV / (1 + r)^n, where PV is the present value, FV is the face value of the bond, r is the yield to maturity (expressed as a decimal), and n is the number of years until maturity. Given FV = $1,000, r = 0.10, and n = 15, using the formula we find the present value (price) of the bond:
PV = $1,000 / (1 + 0.10)^15
PV = $1,000 / (1.10)^15
PV = $1,000 / 4.1772
PV = $239.39 (approximately)
Therefore, the closest answer provided is (d) $239.