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There are zero coupon bonds outstanding that have a YTM of 6.27 percent and mature in 14 years. The bonds have a par value of $10,000. If we assume semiannual compounding, what is the price of the bonds?
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There are zero coupon bonds outstanding that have a YTM of 6.27 percent and mature in 14 years. The bonds have a par value of $10,000. If we assume semiannual compounding, what is the price of the bonds?

User Jeremy Morgan
by
3.9k points

1 Answer

4 votes

Answer:

Price of the Bond is $4,268.26

Step-by-step explanation:

The price of the bonds can be obtained using a Financial calculator by entering the data as follows :

r = 6.27%

Pmt = $0

n = 14

Fv = $10,000

Pv = ? Price of the Bond

Therefore, Pv, Price of the Bond is $4,268.2561.

Thus Price of the Bond is $4,268.26 ( 2 decimal places).

User Kenzie
by
4.2k points
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