Question

A zero-coupon bond has a yield to maturity of 5% and a par value of $1,000. If the bond matures in 16 years, it should sell for a price of ________ today. (Hint: use financial calculator to get PV.) $641.11 $458.11 $1,100.11 $789.11

Answer 1

$458.11

Step-by-step explanation:

The computation of the present value is shown below;

As we know that

Present value = Future value ÷ (1 + rate of interest)^number of years

= $1,000 ÷ (1 + 0.05)^16

= $1,000 ÷ 1.05^16

= $458.11

Hence, the bond should be sell at a price of today is $458.11

Therefore the second option is correct

The same would be considered and relevant