Question

The current​ zero-coupon yield curve for​ risk-free bonds is as​ follows: Maturity ​(years) 1 2 3 4 5 YTM 4.99 % 5.53 % 5.73 % 5.95 % 6.06 % What is the price per $ 100 face value of a​ four-year, zero-coupon,​ risk-free bond?

Answer 1

$79.36

Step-by-step explanation:

The computation of the price per dollar is shown below:

Price per dollar = Face value ÷ (1 + yield to maturity)^number of years

= $100 ÷ (1 + 5.95%)^4

= $100 ÷ 1.2600966129

= $79.36

We simply applied the above formula so that the price per dollar could come