Asked by
Diandra Denise
on Nov 08, 2024
Verified
Atlas Movers is issuing $1,000 face value zero-coupon bonds at a quoted price of 38.70. What is the amount you would pay to purchase one of these bonds?
A) $38.70
B) $387.00
C) $961.30
D) $1,000.00
E) $1,038.70
Zero-Coupon Bonds
Bonds that do not pay interest during their life but are sold at a deep discount, providing profit at maturity when redeemed for their face value.
Face Value
The nominal or dollar value printed on a bond, note, or other financial instrument, representing the amount due at maturity.
Quoted Price
The publicly stated cost or value of a stock, commodity, or financial instrument.
- Understand the concept of zero-coupon bonds and calculate their purchase price and yield.
Verified Answer
GB
Learning Objectives
- Understand the concept of zero-coupon bonds and calculate their purchase price and yield.