You are purchasing a 30-year, zero-coupon bond. The yield to maturity is 9.1% and the face value is $1,000. What is the current market price?

A) $2.20
B) $69.27
C) $73.33
D) $263.20
E) $270.79

Question

You are purchasing a 30-year, zero-coupon bond. The yield to maturity is 9.1% and the face value is $1,000. What is the current market price?A)  $2.20B)  $69.27C)  $73.33D)  $263.20E)  $270.79

Phuong Trinh · Accepted Answer

Final Answer : C, Explanation :  The current market price of the bond is $73.33. This is calculated using the formula:```Bond Price = Face Value / (1 + Yield to Maturity)^n```where:* Bond Price is the current market price of the bond* Face Value is the face value of the bond* Yield to Maturity is the yield to maturity of the bond* n is the number of years to maturityIn this case, the face value is $1,000, the yield to maturity is 9.1%, and the number of years to maturity is 30. Plugging these values into the formula, we get:```Bond Price = 1000 / (1 + 0.091)^30Bond Price = $73.33```

You are purchasing a 30-year, zero-coupon bond. The yield to maturity is 9.1% and the face value is $1,000. What is the current market price?

A) $2.20
B) $69.27
C) $73.33
D) $263.20
E) $270.79

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