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What is the current price of a zero-coupon bond with a 7 percent yield to maturity that matures in 20 years?​
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What is the current price of a zero-coupon bond with a 7 percent yield to maturity that matures in 20 years?​

User Kirill Pisarev
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1 Answer

5 votes

Answer: $416.67

Explanation: Assuming that the bond pays interest annually, and the maturity value of the bond is $1000, the price of the bond can be computed using the simple interest formula:

FV/(1 + r*t)

Where:

FV = Future value: $1000

R = Rate: 7%
T = Time: 20

Plugging these values we get:

$1000/(1+7%*20) = $416.67

User MatrixRonny
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