Asked by
Faiza Luteify
on Nov 08, 2024
Verified
Your firm offers a 10-year, zero-coupon bond. The yield to maturity is 8.8%. What is the current market price of a $1,000 face value bond?
A) $430.24
B) $473.26
C) $835.56
D) $919.12
E) $1,088.00
Zero-Coupon Bond
A debt security that doesn't pay periodic interest, sold at a discount from its face value, and repays the face value at maturity.
Yield To Maturity
The total return anticipated on a bond if the bond is held until it matures, considering both the interest payments and the capital gain or loss.
Market Price
The price at which an asset or service is traded in the open market.
- Explain the attributes of zero-coupon bonds and determine their worth at various intervals.
- Compute the value of bonds considering varying market scenarios, such as fluctuations in interest rates and the duration until maturity.
Verified Answer
KH
Learning Objectives
- Explain the attributes of zero-coupon bonds and determine their worth at various intervals.
- Compute the value of bonds considering varying market scenarios, such as fluctuations in interest rates and the duration until maturity.