Question

Delhi International wants to issue 15-year, zero coupon bonds with yield to maturity 8.5 percent. What price should they charge for these bonds if they have a face value of $1,000

Answer 1

Zero-cupon bond= $294.14

Step-by-step explanation:

Giving the following information:

Zero-coupon bonds with a yield to maturity of 8.5 percent.

Face value= 1,000

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

Zero-cupon bond= [face value/(1+i)^n]

Zero-cupon bond= [1,000 / (1.085^15)

Zero-cupon bond= $294.14