Question

62) A risk-free, zero-coupon bond with a face value of $10,000 has 15 years to maturity. If the YTM is 6.1%, which of the following would be closest to the price this bond will trade at? A) $4937 B) $5760 C) $6582 D) $4114

Answer 1

PV= $4,114

Step-by-step explanation:

Giving the following information:

Face value (F)= $10,000

Time to maturity (t)= 15 years

rate (r)= 6.1%

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

PV= F / (1+r)^t

F= face value

r= rate

t= time

PV= 10,000 / (1.061^15)

PV= $4,114