A zero coupon bond is a bond that is sold now at a discount and will pay its face value when it matures. No interest payments are made. Use the information to answer the questions below. 1. A zero coupon bond with a face value of $20,000 matures in 26 years. What should the bond be sold for now if its rate of return is to be 4.071% compounded annually? Round to the nearest dollar. 2. You buy a zero coupon bond with a face value of $13,000 that matures in 20 years for $8,000. What is your annual compound rate of return? Round to the nearest thousandths of a percent (3 decimal places). 3. You have $9,000 to invest, and you do not need to collect on your investment for 20 years. Option 1: You can buy a zero coupon bond with a face value of $15,000 that matures in 20 years. Option 2: You can deposit the money into a CD account that matures in 20 years with an annual percentage yield (APR) of 6.064%. Which option should you choose? Enter 1 or 2.
A zero coupon bond is a bond that is sold now at a discount and will pay its face value when it matures. No interest payments are made. Use the information to answer the questions below.
1. A zero coupon bond with a face value of $20,000 matures in 26 years. What should the bond be sold for now if its rate of return is to be 4.071% compounded annually? Round to the nearest dollar.
2. You buy a zero coupon bond with a face value of $13,000 that matures in 20 years for $8,000. What is your annual compound rate of return? Round to the nearest thousandths of a percent (3 decimal places).
3.
You have $9,000 to invest, and you do not need to collect on your investment for 20 years.
- Option 1: You can buy a zero coupon bond with a face value of $15,000 that matures in 20 years.
- Option 2: You can deposit the money into a CD account that matures in 20 years with an annual percentage yield (APR) of 6.064%.
Which option should you choose? Enter 1 or 2.
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